10. Problem 10.18 (WACC and Optimal Capital Budget) Adamson Corporation is considering four average-risk projects with the following costs and rates of retum: \begin{tabular}{ccc} Project & Cost & Expected Rate of Return \\ \hline 1 & $2,000 & 16.00% \\ 2 & 3,000 & 15.00 \\ 3 & 5,000 & 13.75 \\ 4 & 2,000 & 12,50 \end{tabular} The company estimates that it can issue debt at a rate of ra=10%, and its tax rate is 25%. It can lssue preferred stock that pays a constant dividend of s4.00 per year at $46.00 per share. Also, its comman stock currently sells for $30.00 per share; the next expected dividend, Du, is $2.75; and the dividend is expected to grow at a constant rate of 7\% per year. The target cagital structure consists of 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. \begin{tabular}{l|l} Cost of debt: & \%s \\ Cost of preferred stock: & \% \\ Cost of retained earnings: & \%t \end{tabular} b. What is Adamson's WACC? Do not round intermediate calculations. Round your answer to two decimal places. Qs c. Only projects with expected returns that exceed wACC will be accepted. Which projects should Adamson accept