GM stock is currently selling for $44 per share and the current dividend is $2.00. The dividend is expected to grow at 9.0% per year. The before-tax cost of debt is 7.75% and the marginal tax rate is 40%. Use the data from this balance sheet to answer the following problems:

Assets			Liabilities & Equity
Cash	2,500		Long-Term Debt	42,236
Accounts Rec.	3,500		Equity	31,661
Inventories	12,456
Net Fixed Assets	55,441
Total Assets	73,897		Total Liab. & Equity	73,897

Calculate GMs after tax WACC.

If GM has the following independent projects it is considering, which should it adopt?

Year	Project 1		Project 2
0	$-4,400		$-6,675
1	1,650		2,230
2	869		2,552
3	1,890		1,044
4	325		1,122
5	721		1,200

c. Why?