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

Project	Cost	Expected Rate of Return
1	$2,000	16.00%
2	3,000	15.00
3	5,000	13.75
4	2,000	12.50

The company estimates that it can issue debt at a rate of r_d = 9%, and its tax rate is 40%. It can issue preferred stock that pays a constant dividend of $4 per year at $44 per share. Also, its common stock currently sells for $33 per share; the next expected dividend, D₁, is $3.50; 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. What is the cost of each of the capital components? Round your answers to two decimal places. Do not round your intermediate calculations.

1. Cost of debt ______%

   Cost of preferred stock fill in the blank _____%

   Cost of retained earnings _____%

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

   ______%

3. Only projects with expected returns that exceed WACC will be accepted. Which projects should Adamson accept? Answer each question with Accept or Reject.

4. Project 1	_______
   Project 2	_______
   Project 3	_______
   Project 4	_______