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Emplre Electric Company (EEC) uses only debt and common equity. It con borrow unlimited amounts at an interest rate of rit = 11 sh at
Emplre Electric Company (EEC) uses only debt and common equity. It con borrow unlimited amounts at an interest rate of rit = 11 sh at long as is finances at its target capital structure, which calls for 30% debt and 70% common equity. lts last dividend (D) was $2.25, its expected constant growth rate is 5\%h, and its common stoek selts foe \$2. EEC's tax rate is 25%. Tho projects are aviliable: Project A has a rate of return of I4\%, and Project B's retien is 11%. These two projects are equany risicy and about as risky as the firm's existing assets. a. What is its cost of common equity? Do not teund intermediate calculationt Round your agswer to two decmai places b. What is the WACC? Do not round intermediate calculations, Rovid you anawer to two decimal places. Whictegrojects should Empire accept
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