Evaluating the feasibility of building new hospital

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Assume that Tenet Healthcare Corp is evaluating the feasibility of building a new hospital in an area not currently served by the company. The company's analysts estimate a beta for the hospital project of 1.7, which is higher than the 1.5 beta of the company's average project. If the risk-free rate, RF, is 7% and the required rate of return on the market, R(Rm), is 12%, what is the Required Return on Equity for Tenet Healthcare Corp? If the new hospital expects to yield a 15% return, is it in the best interest of Tenet's shareholders? Explain your answer.

Reference no: EM131306583

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