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please help me Adamson Corporation is considering four average-risk projects with the following costs and rates of return: Project Cost Expected Rate of Return 1
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Adamson Corporation is considering four average-risk projects with the following costs and rates of return: Project Cost Expected Rate of Return 1 $2,000 16.00% 2 3,000 15.00 3 5,000 13.75 4 2,000 12.50 9%, and its The company estimates that it can issue debt at a rate of rd= tax rate is 25%. It can issue preferred stock that pays a constant dividend of $4.00 per year at $60.00 per share. Also, its common stock currently sells for $51.00 per share; the next expected dividend, D1, is $4.75; and the dividend is expected to grow at a constant rate of 7% per year. The target capital structure consists of 75% common stock, 15% debt, and 10% preferred stock. a. What is the cost of each of the capital components? Do not round intermediate calculations. Round your answers to two decimal places. Cost of debt: % Cost of preferred stock: % Cost of retained earnings: % b. What is Adamson's WACC? Do not round intermediate calculations. Round your answer to two decimal places. % c. Only projects with expected returns that exceed WACC will be accepted. Which projects should Adamson accept? Project 1 -Select- Project 2 -Select- Project 3 -Select- O Project 4 -Select Step by Step Solution
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