Now it's time for you to practice what you've learned.

Suppose Mullens Corporation is considering three average$-$risk projects with the following costs and rates of return:

Mullens estimates that it can issue debt at a rate of $r_d=30\mathrm{.}00\%$ and a tax rate of $T=30\mathrm{.}00\%.$ It can issue preferred stock that pays a constant

dividend of $D_p=$$$5\mathrm{.}00$ per year and at $P_p=$$$20\mathrm{.}00$ per share.

Also, its common stock currently sells for $P_0=$$$10\mathrm{.}00$ per share. The expected dividend payment of the common stock is $D_1=$$$4\mathrm{.}00$ and the

dividend is expected to grow at a constant annual rate of $g=10\mathrm{.}00\%$ per year.

Mullens' target capital structure consists of $w_s=75\mathrm{.}00\%$ common stock, $w_d=15\mathrm{.}00\%$ debt, and $w_p=10\mathrm{.}00\%$ preferred stock.

The after$-$tax cost of debt is approximately

The cost of preferred stock is approximately

The cost of common stock is approximately

The WAAC is approximately

Suppose that Mullens will only accept projects with an expected rate of return that exceeds the WAAC.

Which of the following projects will Mullens accept? Check all that apply.

Project $1$

Project $2$

Project $3$