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What company new required rate of return for porter plumbing

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Reference no: EM132959928

Problem 1: Porter Plumbing's stock had a required return of 15.00% last year, when the risk-free rate was 5.50% and the market risk premium was 4.75%. Then an increase in investor risk aversion caused the market risk premium to rise by 2%. The risk-free rate and the firm's beta remain unchanged. What is the company's new required rate of return? (Hint: First calculate the beta, then find the required return.)

a. 19.00%
b. 17.00%
c. 17.50%
d. 18.00%
e. 18.50%

Reference no: EM132959928

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