1 Video Excel Online Structured Activity: WACC and optimal capital budget 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 2,000 12.50 The company estimates that it can issue debt at a rate of ra = 9%, and its tax rate is 30%. It can issue preferred stock that pays a constant dividend of $5 per year at $59 per share. Also, its common stock currently sells for $32 per share; the next expected dividend, D IS $4.00; and the dividend is expected to grow at a constant rate of 4% per year. The target capital structure consists of 75% common stock, 15% debt, and 10% preferred stock. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. What is the cost of each of the capital components? Round your answers to two decimal places. Do not round your intermediate calculations. Cost of debt % Cost of preferred stock 9% Cost of retained earnings b. What is Adamson's WACC? Round your answer to two decimal places. Do not round your intermediate calculations. % c. Only projects with expected returns that exceed WACC will be accepted. Which projects should Adamson accept? Project 1 accept |accept Project 2 Project 3 reject V Project 4 reject V Check My Work Reset Problem ce Online Activity: WACC and optimal capital budget ER ER AT WALANG Adam Corp is greither res Pred Ceat Expect Rate of Return 100 DON 2 3,000 5.000 13 4 2.000 Then that can ered to the news 12 the needed, then he where that cocok denk het Demon Herren Tebe Open the performed to w . What the comfoch of the place and decide Det Contest Contamos