John J. Smith & Co. is developing a new product. In order to finance this venture, management has requested you to make recommendations. The current market value (market cap) of Smith & Co. is $14M. The company has paid 4.5% of the profit margin in dividends each of the past 3 years. There are $2.5M outstanding shares of common stock. Smith & Co. currently is carrying $4M in long-term debt. The mean cost of capital over the next decade is anticipated to be 7.5%.