eBook Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of ra - 10% as long as it finances at its target capital structure, which calls for 25% debt and 75% common equity. Its last dividend (Do) was $3.20, its expected constant growth rate is 3%, and its common stock sells for $29. EEC's tax rate is 25%. Two projects are available: Project A has a rate of return of 15%, and Project B's return is 10%. These two projects are equally risky and about as risky as the firm's existing assets. a. What is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. % 5. What is the WACC? Do not round intermediate calculations. Round your answer to two decimal places. % c. Which projects should Empire accept? -Select Check My Work (a remaining) o Check My Work (2 remaining) O A-Z eBook Problem Walk-Through o 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 The company estimates that it can issue debt at a rate of ro - 11%, and its tax rate in 259. 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 $40.00 per share the next expected dividend, Das is 54.25; and the dividend is expected to grow at a constant rate of 6% 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 Check My Work (2 remaining) eBook O Pearson Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. The yield to matunty on the company's outstanding bands is 12%, and its tax rate is 25%. Pearson's CFO estimates that the company's WACC is 11.30%. What is Pearson's cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places % A-2