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The Pecking Order of Financing Alternatives: Axon Industries needs to raise $10 million for a new investment project

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The Pecking Order of Financing Alternatives:

Axon Industries needs to raise $10 million for a new investment project. If the firm issues one year debt, it may have to pay an interest rate of 7%, although Axon's managers believe that 6% would be a fair rate given the level of risk. However, if the firm issues equity, they believe the equity may be under-priced by 5%. What is the cost to current shareholders of financing the project out of retained earnings, debt, and equity?