Data for Dana Industries is shown below. Now Dana acquires some risky assets that cause its beta

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Data for Dana Industries is shown below. Now Dana acquires some risky assets that cause its beta to increase by 50%. In addition, expected inflation increases by 2.50%. What is the stock's new required return?
-Initial beta 1.00
-Initial required return 10.20%
-Market risk premium 6.00%
-Percentage increase in beta 50%
-Increase in inflation premium 2.50%
(A) 15.70%
(B) 17.11%
(C) 15.39%
(D) 12.25%
(E) 14.92%
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Horngrens Financial and Managerial Accounting

ISBN: 978-0133866292

5th edition

Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura

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