Solved: What is the firms new required rate of return, Finance Basics

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What is the firms new required rate of return

Problem:

Data for Oakdale Furniture, Inc. is shown below. Now the expected inflation rate and thus the inflation premium increase by 2.0 percentage points, and Oakdale acquires risky assets that increase its beta by the indicated percentage. What is the firm's new required rate of return?

Beta                                     1.50
Required Return                   10.20%
RPm 6.00%
Percentage increase in beta:   20%

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Finance Basics: What is the firms new required rate of return

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