7. CMS Corporation's balance sheet as of today is as follows: The bonds have an 8% coupon rate, semiannual coupon payments, and a par value of 51,000 . They mature exactly 10 years from today. The bonds are currently selling at a price of $1050. The tax rate is 20% Preferred stocks carry a dividend rate of 10% and are currently selling at a price of $95 per share. New preferred stocks will carry the same dividend rate. Common stocks paid a dividend (Do) of $3 per share last year. The company has a beta of 1.25. The current risk-free rate is 3% and the market risk premium is 8%. Dividends are growing at a constant rate and the same growth rate is expected in the future. Common stocks are selling at a price of $45.43 per share. Assume market equilibrium. The company uses long-term sources of financing to finance long-term investments. Assume that the capital structure based on market value is optimal and the corporation plans to raise capital accordingly. Equally risky securities (bonds, preferred stocks, common stocks) will be issued to raise new capital. Assume that flotation costs associated with debt, preferred stocks, and common stocks are 5%,10%, and 15% respectively. CMS has the following independent and equally risky investment opportunities: Calculate the cost of capital (WACC) for CMS. Which project (s) should CMS accept? How much capital should CMS raise (capital budget)