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Empire Electric Company (EEC) uses only deot and common equity, it can borrow unlimited amounts at an interest rate of ra =9% as long as
Empire Electric Company (EEC) uses only deot and common equity, it can borrow unlimited amounts at an interest rate of ra =9% as long as is finances at its target capital structure, which calis for 25% debt and 75% common equity. ths last dividend (Do) was $1.65, its expected constant growth rate is 3%, and its common stock sells for $27. EEC's tax rote is 25%. Two projects are avallable: Project A has a rate of return of 15%, and Project 8 's return is 8%. These two projects are equally risky and about as risky as the firmis existing assets. a. What is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. b. What is the WACC? Do fot round intermediate calculations. flound your answer to two decimgl places. c. Which projects should Empire acctpt
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