2. Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at rd = 12%, and its common stock currently pays a $3.75 dividend per share (D0 = $3.75). The stock's price is currently $27.75, its dividend is expected to grow at a constant rate of 7% per year, its tax rate is 25%, and its WACC is 12.80%. What percentage of the company's capital structure consists of debt? Do not round intermediate calculations. Round your answer to two decimal places.

3. Adamson Corporation is considering four average-risk projects with the following costs and rates of return:

Project	Cost		Expected Rate of Return
1	$2,000		16.00%
2	3,000		15.00
3	5,000		13.75
4	2,000		12.50

The company estimates that it can issue debt at a rate of r_d = 9%, and its tax rate is 25%. It can issue preferred stock that pays a constant dividend of $4.00 per year at $46.00 per share. Also, its common stock currently sells for $39.00 per share; the next expected dividend, D₁, is $4.25; and the dividend is expected to grow at a constant rate of 6% per year. The target capital structure consists of 75% common stock, 15% debt, and 10% preferred stock.

1. What is the cost of each of the capital components? Do not round intermediate calculations. Round your answers to two decimal places.

   Cost of debt: ___ %

   Cost of preferred stock: ____ %

   Cost of retained earnings:____ %

2. What is Adamson's WACC? Do not round intermediate calculations. Round your answer to two decimal places.____ %