Please help and explain the logic behind the answers:

Your employerPerpetuaInc is contemplating a possible debt issuance, which will be the first debt the firm has taken on.Perpetuahas a very stable cash flow stream producing EBITDA of 1.53 million each year, and face a company tax rate of 35%. The company is not expecting any growth in earnings in the foreseeable future, and has a cost of capital of 10%. The CFO is floated the idea of issuing debt, which is quite cheap in the current low interest environment. The firm's investment banker's believe that Perpetual could issue up to 3.07 million in interest only perpetual debt (a new security), which will cost the firm 5.52 percent in interest each year forever. What will issuing the new debt and retiring existing equity do to the firm's cost of equity?