Assume your firm can lock in a cost of Debt for this project at $6\mathrm{.}5\%(\mathrm{.}065)$ annual

rate. Also, assume the stockholders in your firm expect a return on equity that is

$2$ percentage points higher than the cost of debt.

$3.$a$.$ Explain why the cost of equity for a proposed project like this would be higher than

the cost of debt