Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Adamson Corporation is considering four average-risk projects with the following costs and
| 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 rd = 11%, and its tax rate is 25%. It can issue
-
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 : % -
What is Adamson's WACC? Do not round intermediate calculations. Round your answer to two decimal places.
%
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