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

Project	Cost	Expected Rate of Return
1	$3,500	43.00%
2	$4,000	50.00%
3	$3,750	51.00%

Mullens estimates that it can issue debt at a rate of rd=25.00%rd=25.00%and a tax rate of T=30.00%T=30.00%. It can issue preferred stock that pays a constant dividend of Dp=$15.00Dp=$15.00per year and at Pp=$60.00Pp=$60.00per share.

Also, its common stock currently sells for P0=$8.00P0=$8.00per share. The expected dividend payment of the common stock is D1=$4.00D1=$4.00and the dividend is expected to grow at a constant annual rate of g=10.00%g=10.00%per year.

Mullens target capital structure consists of ws=70.00%ws=70.00%common stock, wd=15.00%wd=15.00%debt, and wp=15.00%wp=15.00%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