Post: Complete the problem below and answer questions 1, 2, and 3 in your post. Serenity's Super Sopapillas is considering five average-risk projects with the following costs and rates of return. Serenity's Super Sopapillas Cost & Rates of Return Per Project Project Cost Expected Rate of Return 1 $22,000 12.50% 2 $40,000 15.00% 3 $45,000 13.75% 4 $55,000 13.00% 17.50% $35,000 5 The company estimates that it can issue debt at a rate of rd = 12%, and its tax rate is 25%. It can issue preferred stock that pays a constant dividend of $6.00 per year at $50.00 per share. Also, its common stock currently sells for $30.00 per share; the next expected dividend, D1, is $3.50, and the dividend is expected to grow at a constant rate of 4% per year. The target capital structure consists of 70% common stock, 10% debt, and 20% preferred stock. 1. What is the cost of each of the capital components? That is, what is the cost of debt, cost of preferred, and cost of equity? 2. What is Serenity's Super Sopapillas' WACC? 3. Only projects with expected returns that exceed the WACC will be accepted. Which projects should Serenity's Super Sopapillas accept? What is the dollar amount of Serenity's Super Sopapillas' optimal capital budget?