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What is the company new required rate of return

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Reference no: EM132926226

Question - Porter Plumbing's stock had a required return of 14.00% 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. 17.58%

b. 15.98%

c. 16.38%

d. 16.78%

e. 17.18%

Reference no: EM132926226

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