5. Bradford Company is evaluating the following projects based on their weighted average costs of capital (WACC 1 and WACC2 ). Assume Bradford can raise money at a cost of 9% using the combination of debt and retained earnings, and at a cost of 12% if they use the combination of debt and a new issue of common stock. Note, Bradford does not use preferred stock. If Bradford can raise $40,000,000 at the 9% rate, which of the following project(s) should they undertake? ( 6 points) 6. Southwest Airlines, Inc. is planning to sell a new issue of preferred stock to the public at a price of $20 a share. Flotation costs are estimated to be 10% and this preferred stock is set to pay a dividend of $2.40. What is the cost of Southwest Airlines preferred stock if the company has a marginal tax rate of 34 percent. ( 6 points)