Question: Please work out Problem Data for Dana Industries is shown below. Now Dana acquires some risky assets that cause its beta to increase by 15.0%.

Please work out Problem

Data for Dana Industries is shown below. Now Dana acquires some risky assets that cause its beta to increase by 15.0%. In addition, expected inflation increases by 1.50 percentage points. What is the stock's new required rate of return? Do not round your intermediate calculations.

Initial beta	1.00
Initial required return (r_s)	8.60%
Market risk premium, RP_M	6.00%
Percentage increase in beta	15.00%
Increase in inflation premium, IP	1.50%

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