Empire Electric Company $($EEC$)$ uses only debt and common equity. It can borrow unlimited amounts at an interest rate of $r_d=9\%$ as long as it finances at its

target capital structure, which calls for $35\%$ debt and $65\%$ common equity. Its last dividend $(D_0)$ was $$2\mathrm{.}35,$ its expected constant growth rate is $5\%,$ and its

common stock sells for $$26.$ EEC's tax rate is $25\%.$ Two projects are available: Project A has a rate of return of $14\%,$ and Project B$\text{'}$s return is $11\%.$ 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?