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Empire Electric Company (EfC) uses oniv bebt and common equity. It can borrow unimited amounts at an interest rate of re =10% as long as
Empire Electric Company (EfC) uses oniv bebt and common equity. It can borrow unimited amounts at an interest rate of re =10% as long as it finances at its target capital structure, which calis for 30% debt and 704 common equity. Its last dividend (D0) was $2.50, its expected constant growth rate is 474 , and its common stock selis for $27. EEc. tax rate is 25%. Two nrojects are available: Project A has a rate of return of 12%, and Project B's return is 8%. These two projects are equaliy risky and about as risky as the firm's existing assets 6. What is its cost of common equity? Do not round intermediate caiculations. Plound your answer to two decimal places: b. What is the Wacc? Do not round intermediate calculations. Roound your ancwer to two decimal places: c. Which proyects thould Empire accept
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