ELON company bonds yield to maturity is 10.80%. The company actual dividends are $1.40 in common stocks and $6.00 in preferred stocks. The preferred stocks flotation costs were 4% of price (the price is $70). The price of common stocks is 35. The growth rate in dividends during the last years is 6%. The optimal capital structure is: Debt 45% Preferred Stock 15% 40% Common Equity (Retained Earnings) The balance of retained earnings of Elon is 22 millions and the tax rate is 30%. If Elon issue new common stocks flotation cost will be $4 per share. Elon is in the evaluation process of the following projects: Project Return Cost 7.80% 10 millions 1 2 11.5% 3 9.5% 20 millions 15 millions 20 millions 4 10.5% 5 8.80% 10 millions a) Compute the after-tax cost of debt b) Compute the cost of preferred stocks c) Compute the cost of retained earnings d) Compute the weighted average cost of capital e) If Elon issue new common stocks, what will be the marginal cost of capital? f) Which project(s) Elon should accept