Calculate the required rate of return for climax inc


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 2.30, and (5) its realized rate of return has averaged 15.0% over the last 5 years. Do not round your intermediate calculations.

a. 17.76%

b. 18.87%

c. 18.50%

d. 16.28%

e. 20.91%

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Financial Management: Calculate the required rate of return for climax inc
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