1) Axon Industries needs to raise $4000000 USDs for a new investment project. If the firm issues 1-year debt, it may have to pay an interest rate of 10%, although Axon's managers believe that 7% would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 7.5%.What is the cost (in USDs) to current shareholders of financing the project out of retained earnings?

2)Axon Industries needs to raise $4000000 USDs for a new investment project. If the firm issues 1-year debt, it may have to pay an interest rate of 10%, although Axon's managers believe that 7% would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by 7.5%.What is the cost (in USDs) to current shareholders of financing the project out of debt?