Ch 10: Assignment - The Cost of Capital elok Problem Walk-Through 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 's - 10%, and its tax rate is 25%. It can issue preferred stock that pays a constant dividend of $5.00 per year at $50.00 per share. Also, its common stock currently sells for 549,00 per share the next expected dividend, Du, is $5.25; and the dividend is expected to grow at a costat rate of 6% per year. The target capital structure consiit of 759 common stock, 15 debt, and 10% preferred stock a. What is the cost of each of the capital components? Do not round Intermediate calculations. Round your answers to two decimal places Cost of debti Cost of preferred stock Cost of retained earnings b. What is Adamson' WACC? Do not round Intermediate calculations. Hound your answer to two decimal place c. Only projects with expected returns that exceed WACC will be accepted. Which projects should Adamson accepty Project 1 Project 2 Project 3 Project 4 Grade It Now Save & Continue Continue without saving Ch 10: Assignment - The Cost of Capital Book Problem Walk-Through 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 to 10%, and its tax rate is 259. It can issue preferred stock that pays a constant dividend of $5.00 per year $58.00 per share. Also, its common stock currently sells for $49.00 per share the next expected dividend, Dils $5.25; and the dividend is expected to grow at a constant rate of 6% per year. The target capital structure consists of 759 common stock, 15% debt, and 10% preferred stock a. 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 b. What is Adamson's WACC? Do not round Intermediate calculations. Round your answer to two decimal places. 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 Grade It Now Save & Continue Continue without saving