The Shoe Building Inc. is a $100\%$ equity$-$financed company $($no debt or preferred stock$)$; hence, its WACC equals its cost of common equity. The Shoe Building Inc.$\text{'}$s retained earnings will be sufficient to fund its capital budget in the foreseeable future. The company has a beta of $1\mathrm{.}50,$ the risk$-$free rate is $5\mathrm{.}0\%,$ and the market return is $6\mathrm{.}5\%.$

What is The Shoe Building Inc.$\text{'}$s cost of equity?

$9\mathrm{.}82\%$

$2\mathrm{.}32\%$

$23\mathrm{.}54\%$

$7\mathrm{.}25\%$

The Shoe Building Inc. is financed exclusively using equity funding and has a cost of equity of $12\mathrm{.}25\%.$ It is considering the following projects for investment next year:

$\backslash$table$[[$Project$,$Required Investment,Expected Rate of Return$],[$W$,$$$54,675,13\mathrm{.}65\%$