Calculate the required rate of return for Climax Inc., assuming that (1) investo

Question

Calculate the required rate of return for Climax Inc., assuming that (1) investors expect a 4.0% rate of inflation in the future, (2) the real risk-free rate is 3.0%, (3) the market risk premium is 5.0%, (4) the firm has a beta of 1.00, and (5) its realized rate of return has averaged 15.0% over the last 5 years. a. 10.29% b. 12.60% c. 12.00% d. 10.83% e. 11.40% Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution

Calculate the required rate of return for Climax Inc., assuming that (1) investors expect a 4.0% rate of inflation in the future, (2) the real risk-free rate is 3.0%, (3) the market risk premium is 5.0%, (4) the firm has a beta of 1.00, and (5) its realized rate of return has averaged 15.0% over the last 5 years. Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution Hide FeedbackShow All Feedback Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution Check My Work Feedback Post Submission Feedback Solution Check My Work Feedback Check My Work Feedback Check My Work Feedback Post Submission Feedback Post Submission Feedback Post Submission Feedback Solution Solution Solution

a. 10.29% b. 12.60% c. 12.00% d. 10.83% e. 11.40%

Explanation / Answer

c. 12.00%

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