WACC AND OPTIMAL CAPITAL BUDGET Adamson Corporation is considering four average-risk projects with the following costs and rates of return:
Project | Cost | Expected Kate of Return |
1 | $2,000 | 16.00% |
2 | 3,000 | 15.00 |
3 | 5,000 | 13.75 |
4 | 2,000 | 12.30 |
The company estimates that it can issue debt at a rate of rd = 10%, and its tax rate is 30%. It can issue preferred stock that pays a constant dividend of $5.00 per year at $50.00 per share. Also, its common stock currently sells for $38.00 per share; the next expected dividend, D1, is $4.25, and the dividend is expected to grow at a constant rate of 5% per year. The target capital structure consists of 75% common stock, 15% debt, and 10% preferred stock.
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
Corporate Financial Accounting
Principles of Economics (MindTap Course List)
Foundations of Business (MindTap Course List)
Essentials of Business Communication (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
Probability and Statistics for Engineering and the Sciences
Accounting Information Systems
Cornerstones of Financial Accounting
Principles of Macroeconomics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
Financial & Managerial Accounting
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
STATISTICS F/BUSINESS+ECONOMICS-TEXT
Financial And Managerial Accounting
Essentials of Economics (MindTap Course List)
Management, Loose-Leaf Version
College Accounting, Chapters 1-27
Financial Accounting
Managerial Accounting: The Cornerstone of Business Decision-Making
Intermediate Accounting: Reporting And Analysis
College Accounting (Book Only): A Career Approach
Accounting Information Systems
MKTG 12:STUDENT ED.-TEXT
Contemporary Marketing
Financial & Managerial Accounting
Financial Accounting
Fundamentals of Financial Management (MindTap Course List)
Pkg Acc Infor Systems MS VISIO CD
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
Accounting (Text Only)
Principles of Macroeconomics (MindTap Course List)
College Accounting (Book Only): A Career Approach
Statistics for Business & Economics, Revised (MindTap Course List)
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Exploring Economics
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Macroeconomics
Practical Management Science
Survey of Accounting (Accounting I)
Corporate Financial Accounting
Economics For Today
Cornerstones of Cost Management (Cornerstones Series)
Economics (MindTap Course List)
Purchasing and Supply Chain Management
Understanding Management (MindTap Course List)
Macroeconomics: Private and Public Choice (MindTap Course List)
Managerial Accounting
MACROECONOMICS FOR TODAY
Micro Economics For Today
Economics: Private and Public Choice (MindTap Course List)
Principles of Microeconomics
Microeconomics: Private and Public Choice (MindTap Course List)