Firm A has 11 equally risky capital budgeting projects, each costing $19,608 million and each having an expected rate of return of 8.25%. Firm A’s retained earnings breakpoint is $196.08 million. The firm’s WACC using retained earnings is 8.2% but increases to 8.5% if new equity must be issued. The company invests in projects where the expected return exceeds the cost of capital. How much capital should Firm A raise and invest? Why?

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