Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of rd = 10% as long as it finances at its target capital structure, which calls for 30% debt and 70% common equity. Its last dividend (D0) was $2.25, its expected constant growth rate is 4%, and its common stock sells for $28. EEC's tax rate is 25%. Two projects are available: Project A has a rate of return of 11%, and Project B's return is 10%. These two projects are equally risky and about as risky as the firm's existing assets.

• What is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. %
• What is the WACC? Do not round intermediate calculations. Round your answer to two decimal places. %
• Which projects should Empire accept?