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Adams Corporation is evaluating the cost of capital for one of its projects with average risK. he company estimates that it can issue debt at

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Adams Corporation is evaluating the cost of capital for one of its projects with average risK. he company estimates that it can issue debt at 10 percent (yield-to-maturity), and its tax rate is 30 percent. The expected dividend (D.) is $3.50, and the dividend is expected to grow at a constant rate of 6 percent per year for the foresecable future. Adams Corporation stock is currently selling at $35.00/share. The target capital ratio consists of 60 percent common stock and 40 percent debt. 110) What is the after-tax cost of debt capital? (5pts) Show your work below (A) 5% (B) 6% (C) 7% (D) 9% (E) 1196 11 (ii) What is the cost of equity capital? (5pts) Show your work below (A) 10% (B) 12% (C) 14% (D) 16% (E) 18% 11 (ii) What is the Adam's cost of capital (WACC) (5 pts) Show your work below (A) 10.5% (B) 12.4% (C) 14.5% (D) 11.4% (E) 16.5%

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