Adamson Corporation is considering four average$-$risk projects with the following costs and rates of return:

$$41$ per share. Also, its common stock currently sells for $$33$ per share; the next expected dividend, $D_1,$ is $$3\mathrm{.}00$; and the dividend is expected to grow at a constant rate

of $7\%$ per year. The target capital structure consists of $75\%$ common stock, $15\%$ debt, and $10\%$ preferred stock. The data has been collected in the Microsoft Excel Online

file below. Open the spreadsheet and perform the required analysis to answer the questions below.

Open spreadsheet

a$.$ What is the cost of each of the capital components? Round your answers to two decimal places. Do not round your intermediate calculations.

Cost of debt

$\%$

Cost of preferred stock

$\%$

Cost of retained earnings

$\%$

b$.$ What is Adamson's WACC? Round your answer to two decimal places. Do not round your intermediate calculations.

$\%$

c$.$ Only projects with expected returns that exceed WACC will be accepted. Which projects should Adamson accept?

Project $1$

Project $2$

Project $3$

Project $4$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\mathrm{.}00\%$

$23,00015\mathrm{.}00$

$35,00013\mathrm{.}75$

$42,00012\mathrm{.}50$

The company estimates that it can issue debt at a rate of rd $=10\%,$ and its tax rate is $35\%.$ It can issue preferred stock that pays a constant dividend of $$6$ per year at $$41$ per share. Also, its common stock currently sells for $$33$ per share; the next expected dividend, D$1,$ is $$3\mathrm{.}00$; and the dividend is expected to grow at a constant rate of $7\%$ per year. The target capital structure consists of $75\%$ common stock, $15\%$ debt, and $10\%$ preferred stock. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.