Question: Please DO NOT use excel. Show all work and explain each step. Novartis Pharmaceutical Inc. uses only debt and common equity. It can borrow unlimited

Please DO NOT use excel. Show all work and explain each step.

Novartis Pharmaceutical Inc. uses only debt and common equity. It can borrow unlimited amounts at an interest rate of 8% as long as it finances at its target capital structure, which calls for 30% debt and 70% common equity. Its last dividend was $2.5, expected constant growth in dividends is 6% and the company's common stock currently sells for $26. Marginal tax rate is 25%. The company has two projects available: Project A has a rate of return of 12% and project B's return is 9.5%. Both projects are equally risky and about as risky as the firm's existing assets. a. What is the cost of common equity? b. What is the WACC? C. Which project should the company accept

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