Scorecard Corp. is a 100% equity-financed company (no debt or preferred stock); hence, its WACC equals its cost of common equity. Scorecard Corp.'s retained earnings will be sufficient to fund its capital budget in the foreseeable future. The company has a beta of 1.50, the risk-free rate is 5.0%, and the market return is 6.5%.

What is Scorecard Corp.'s cost of equity? o 16.25% o 8.75% o 24.13% o 7.25%

Scorecard Corp. 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 Scorecard Corp. accepts any project whose expected rate of return exceeds its cost of capital. How large should next year's capital budget be? o $45,925

o $56,250

o $24,225

o $34,550