344125 sition 14i25) Refer to Gurt Electne Company nformancon shown in the teck below Acsume now that GEC needs to rase 5300 milion in now copial What is GEC's marginal cost of capital for eveluating the 5 ioo mation in cepelal propects and any obhers tivet might arde durng the yoar? Gulf Electric Company Gulf Electric Company (GEC) uses only debt and equity in its capital structure. it can borrow unlimited amounts at an interest rate of 10 percent so long as it fin ances at its target capital structure, which calls for 55 percent debt and 45 percent common equity, lts last dividend was $2.10; its expected constant growth rate is 6 percent, its stock selis on the NYSE at a price of $34; and new stock would net the company $28 per share after flotation costs. GEC's marginal tax rate is 39 percent, and it expects to have $100mili on of retained eamings this year. GEC has fwo projects available: Project A has a cost of 5200 milion and a rate of retum of 13 percent, while Project 3 has a cost of $125 milion and a rate of return of 10 percent. All of the company's potential projects are equally risky. asters 9ath fi.9th D. teca rie tes wou min is lowest. Fiscie of tais atevit