Ballack Inc. is a 100% equity-financed company (no debt or preferred stock); hence its weighted average cost of capital (WACC) equals its cost of common equity. Ballack's retained earnings will be sufficient to fund its capital budget in the foreseeable future. The company has a beta of 1.5, the risk-free rate is 5.0% and the market risk premium is 5.5%. What is Ballack's WACC?
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