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

The company estimates that it can issue debt at a rate of r_d = 9%, and its tax rate is 25%. It can issue preferred stock that pays a constant dividend of $5.00 per year at $55.00 per share. Also, its common stock currently sells for $40.00 per share; the next expected dividend, D₁, is $3.75; 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.

a. What is the cost of each of the capital components?

Cost of debt: %

Cost of preferred stock: %

Cost of retained earnings: %

b.What is Adamson's WACC?

Project	Cost	Expected Rate of Return
1	$2,000	16%
2	3,000	15.0
3	5,000	13.75
4	2,000	12.50