1. Howard industries has a target capital structure consisting of 45% debt, 5% preferred stock, and 50% common equity. The before-tax YTM on Howard's long-term bonds is 9.5%, its cost of retained earnings is 12.5%. If the firm's tax rate is 40%, what is Howard's WACC if it doesn't have to issue new common stock?

A 10.24% B 10.01% C 9.22% D 9.79% E 9.67%

Howard Industries undertakes a variety of projects with different levels of risk. Howard adds 2 percentage points to its WACC for high-risk projects and subtracts 2 percentage points from its WACC for low-risk projects. In other words, the cost of capital for a high-risk project equals WACC + 2%, while a low-risk project uses a cost of capital equal to WACC - 2%. WACC remains the same for average-risk projects. Howard's management is considering the following list of projects, and each project's risk is indicated in the table below. Indicate which projects Howard Industries should accept. Check all projects that should be accepted. Howard Industries undertakes a variety of projects with different levels of risk. Howard adds 2 percentage points to its WACC for high-risk projects and subtracts 2 percentage points from its WACC for low-risk projects. In other words, the cost of capital for a high-risk project equals WACC + 2%, while a low-risk project uses a cost of capital equal to WACC - 2%. WACC remains the same for average-risk projects. Howard's management is considering the following list of projects, and each project's risk is indicated in the table below. Indicate which projects Howard Industries should accept. Check all projects that should be accepted