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?

Answer rating: 100% (QA)

To determine the size of Weghorst Cos capital budget we need to calculate the weighted average cost ... View the full answer