Lancaster Engineering Inc. (LEI) has the following capital structure, which it considers to be optimal: Debt 25% Preferred stock 15% Common equity 60% 100% LEIs expected net income this year is $34,285.72; its established dividend payout ratio is 30%; its federal-plus-state tax rate is 40%; and investors expect future earnings and dividends to grow at a constant rate of 9%. LEI paid a dividend of $3.60 per share last year, and its stock currently sells for $54.00 per share. LEI can obtain new capital in the following ways: - Preferred: New preferred stock with a dividend of $11.00 can be sold to the public at a price of $95.00 per share. - Debt: Debt can be sold at an interest rate of 12%. a. Determine the cost of each capital component. b. Calculate the WACC. c. LEI has the following investment opportunities that are average-risk projects: Project Cost at t = 0 Rate of Return A $10,000 17.4% B 20,000 16.0 C 10,000 14.2 D 20,000 13.7 E 10,000 12.0 Which projects should LEI accept? Why?