Kendra Brown is analyzing the capital requirements for Reynold Corporation for next year. Kendra forecasts that Reynold will need $14 million to fund all of its positive-NPV projects and her job is to determine how to raise the money. Reynold's net income is $10 million, and it has paid a $3 dividend per share (DPS) for the past several years (2 million shares of common stock are outstanding); its shareholders expect the dividend to remain constant for the next several years. The company's target capital structure is 40% debt and 60% equity.

1) Suppose once again that management wants to maintain the $3 DPS. In addition, the company wants to maintain its target capital structure (40% debt, 60% equity) and its $14 million capital budget. What is the minimum dollar amount of new common stock the company would have to issue in order to meet all of its objectives? Enter your answer in dollars. For example, an answer of $2 million should be entered as 2,000,000, not 2. Round your answer to the nearest dollar.

2) Now consider the case in which management wants to maintain the $3 DPS and its target capital structure but also wants to avoid issuing new common stock. The company is willing to cut its capital budget in order to meet its other objectives. Assuming the company's projects are divisible, what will be the company's capital budget for the next year? Enter your answer in dollars. For example, an answer of $2 million should be entered as 2,000,000, not 2. Round your answer to the nearest dollar.