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Weghorst Co. is a 100% equity-financed company (no debt or preferred stock); hence, its WACC equals its cost of common equity. Weghorst Co.'s retained earnings

Weghorst Co. is a 100% equity-financed company (no debt or preferred stock); hence, its WACC equals its cost of common equity. Weghorst Co.'s retained earnings will be sufficient to fund its capital budget in the foreseeable future. The company has a beta of 1.35, the risk-free rate is 4.5%, and the market return is 5.9%. 


What is Weghorst Co.'s cost of equity? 6.39% 8.02% 19.08% 1.95% Weghorst Co. is financed exclusively using equity funding and has a cost of equity of 10.65%. It is considering the following projects for investment next year:


 Project Required Investment Expected Rate of Return W $23,575 9.65% X $13,250 14.60% Y $10,975 14.10% Z $32,675 9.70% Each project has average risk, and Weghorst Co. accepts any project whose expected rate of return exceeds its cost of capital. 



How large should next year's capital budget be?

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