1.(15 points). FortunatosCorporation is considering four average-risk projects with the following costs and rates of return:ProjectCostExpected Rate of Return1$4,00013.00%25,00015.0037.00018.7543,00012.50The company estimates that it can issue debt at a rate of rd=10%, and its tax rate is 30%. Itcan issue preferred stock that pays a constant dividend of $5.00 per year at $50.00 per share. Also, its common stock currently sells for $38.00 per share; the next expected dividend, D1is $4.25, and the dividend is expected to grow at a constant rate of 5% per year. The target capital structure consists of 75% common stock, 15% debt, and 10% preferred stock.

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