QUESTION $4$

"ECB borrows $$300,000$ USDs by issuing $5-$year bonds. ECB's cost of debt is $5\%,$ so it will need to pay $$15,000$ USDs in interest each year for the nert $5$ years, and then repay the principal $$300,000$ USD in year $5.$ ECB's marginal tax rate will remain $35\%$ throughout this period. By how much $($in USDs$)$ does the interest tax shield increase the value of ECB $?$ Note: Express your answers in strictly numerical terms. For example, if the answer is $$500,$ enter $500$ as an answer."

QUESTION $5$

"Aron Industries needs to raise $$3,000,000$ USDs for a new investment project. If the firm issues $1-$year debt, it may have to pay an interest rate of $34,$ although Axon's managers believe that $7\mathrm{.}5\%$ would be a fair rate given the level of risk. If the firm issues equity, they believe the equity may be underpriced by $9\mathrm{.}5\%.$what is the cost $($in USDs$)$ to current shareholders of financing the project out of retained earnings? Note: Express your answers in strictly numerical terms. For example. If the answer is $$500,$ enter $500$ as an answer."

QUESTION $6$

"Axon Industries needs to raise $$3,000,000$ USDs for a new investment project. If the firm issues $1-$year debe, it may have to pay an interest rate of $3$ aty although Axon's managers believe that $7\mathrm{.}546$ would be a fair rate given the level of risk. If the firm issues equity, they believe the equity mayy be underpriced by $8$:$54.$ What is the cost $($in USDs$)$ to current shareholders of financing the project out of debt? Note; Express your answers in strictly numerical terms. For example if tite answer is $$500.$ enter $500$ as an answer."