A company's current capital structure consists of 40% common stock or retained earnings, 10% preferred stock, and 50% long-term debt. The company has concluded from years of operation that this capital structure is the best.

The management of the company believes that the best capital budget for next year is $1.4 million, which is derived from the following sources: $700,000 of bonds with an interest rate of 10% at face value, $140,000 of preferred shares with a dividend yield of 11%, and the rest supported by next year's retained earnings.

The current market price of the Company's common stock is $25 per share, and the dividend of the common stock is expected to be $2 per share next year. The Company currently has 250,000 common shares outstanding, and it is expected that the net income available to common shareholders next year (including the net income from the capital budget for next year) will be $1.06 million. The company's dividend and earnings growth have both been 5.7 per cent over the past decade, but are expected to grow at just 5 per cent in the foreseeable future. The corporate income tax rate is 25%, requiring:

(1) Calculate the company's projected retained earnings for the next year.

(2) Assuming that the capital structure of the project investment is the same as the existing structure of the company, try to calculate the weighted average capital cost of the project.

(3) If the net income available to the company's common shareholders next year is only $0.8 million (instead of $1.06 million), and the company maintains its capital budget of $1.4 million unchanged, will the weighted average marginal cost of capital of the company next year change (assuming the dividend policy remains unchanged)?