The Fontenot Companys cost of common equity is 13 percent, its before-tax cost of debt is 8 percent, and its marginal tax rate is 45 percent. The stock sells at book value. Using the following balance sheet, calculate Fontenots WACC.

Assets			Liabilities and Equity
Cash	$ 110
Accounts receivable	290
Inventories	440		Long-term debt	$1,386
Net plant and equipment	2,500		Common equity	1,954
Total assets	$3,340		Total liabilities and equity	$3,340

	a.	6.01%
	b.	8.70%
	c.	9.10%
	d.	9.43%
	e.	10.93%

Kuhn Foods is considering the following independent projects for the coming year:

Project	Required Investment	Expected Rate of Return	Risk
X	$8 million	9.5%	High
Y	5 million	8.5%	Average
Z	3 million	8.0%	Low

Kuhns WACC is 9 percent, but it adjusts for risk by adding 2 percent to the WACC for high-risk projects and subtracting 2 percent for low-risk projects. Which project(s) should Kuhn accept assuming it faces no capital constraints?

	a.	Project X only
	b.	Projects X and Z
	c.	Projects X and Y
	d.	Projects Y and Z
	e.	Project Z only