Question: capital structure, which calls for 2 5 % debt and 7 5 % common equity. Its last dividend ( D 0 ) was $ 2

capital structure, which calls for 25% debt and 75% common equity. Its last dividend (D0) was $2.30, its expected constant growth rate is 6%, 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 14%, and Project B's return is 12%. 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. %
b. What is the WACC? Do not round intermediate calculations. Round your answer to two decimal places.
%
c. Which projects should Empire accept?
capital structure, which calls for 25% debt and 75% common equity.

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