Question: Data for Atwill Corporation is shown below. Now Atwill acquires some risky assets that cause its beta to increase by 30%. In addition, expected inflation

Data for Atwill Corporation is shown below. Now Atwill acquires some risky assets that cause its beta to increase by 30%. In addition, expected inflation increases by 2.00%. What is the stock's new required rate of return?

Initial beta

1.00

Initial required return (rs)

10.20%

Market risk premium, RPM

6.00%

Percentage increase in beta

30.00%

Increase in inflation premium, IP

2.00%

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