1 3 4 12.50 eBook Problem Walk-Through Adamson Corporation is considering four average-risk projects with the following costs and rates of return: Project Cost Expected Rate of Return $2,000 16.00% 2 3,000 15.00 5,000 13.75 2,000 The company estimates that it can Issue debt at a rate of ro - 11%, and its tax rate is 25%. It can issue preferred stock that pays a constant dividend of $6.00 per year at $50.00 per share. Also, its common stock currently sells for $43.00 per share the next expected dividend, Di, is $4.25; and the dividend is expected to grow at a constant rate of 6% per year. The target capital structure consists or 75% common stock, 15% debt, and 10% preferred stock. a. What is the cost of each of the capital components? Do not round Intermediate calculations. Round your answers to two decimal places. 8.25 % Cost of preferred stock: Cost of retained earnings: b. What is Adamson's WACC? Do not round intermediate calculations. Round your answer to two decimal places. Cost of debt: 12 % 15.88 % % c. Only projects with expected returns that exceed WACC will be accepted. Which projects should Adamson accept? Project 1 Project 2 Project 3 Project 4 -Select- -Select- -Select -Select