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Adamson Corporation is considering four average - risk projects with the following costs and rates of return: Project Cost Expected Rate of Return 1 $

Adamson Corporation is considering four average-risk projects with the following costs and rates of return:
Project Cost Expected Rate of Return
1 $2,00016.00%
23,00015.00
35,00013.75
42,00012.50
The company estimates that it can issue debt at a rate of rd =9%, and its tax rate is 25%. It can issue preferred stock that pays a constant dividend of $7.00 per year at $54.00 per share. Also, its common stock currently sells for $37.00 per share; the next expected dividend, D1, is $4.25; and the dividend is expected to grow at a constant rate of 5% per year. The target capital structure consists of 75% common stock, 15% debt, and 10% preferred stock.
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: %
What is Adamson's WACC? Do not round intermediate calculations. Round your answer to two decimal places.
%
Only projects with expected returns that exceed WACC will be accepted. Which projects should Adamson accept?
Project 1 accept or reject
Project 2 accept of reject
Project 3 accept or reject
Project 4 accept or reject

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