JPMorgan Chase & Co, is estimating its overall cost of capital.

JPM is currently carrying a 10-year $1,000 face-value bond with an annual coupon rate of 6% and the bond is currently sold for $865. JPM's beta is about 1.2, the risk-reee rate is 3% and the market expected return is 13%; JPM uses only CAPM to calculate its cost of equity. JPM's preferred stock is currently sold for $90 and its divident is $8.1 per share. JPM's target capital structure is 30% debt, 20% preferred stock, and 50% common equity. JPM's tax rate is 21%; Show all the steps including the formulas. When facing an above or below average project, the firm uses, respectively, plus-minus 2% of WACC for evaluating the project.

a) What is the company's cost of bond? b) What is the company's cost of preferred stock? c) What is the company's cost of equity? d) What is the company's weighted average cost of capital? e) There are two average risk projects that JPM is considering: Project A with expecetd return of 8% and Project B with the expecetd rate of return of 12.2%. Do you choose any of these projects? Why? f) Suppose now Project A is more risking than average. What should the firm use as its cost of capital for A? Given this, should the firm still chosses or rejects project A?