MEC uses only debt and equity. It can borrow unlimited amount at an interest rate of 10% as long as it finances at its target capital structure, which calls for 45% debt and 55% common equity. Its last dividend was 2, its expected constant growth rate is 4%, nd its stock sells at a price of 20. MEC is tax rate is 40%. Two project are available: project A has a rate of return of 13%,while Project B has a rate of return of 10%. All of the company is potential project are equally risky and as risky as the firm is other assets.