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What is the companys new required rate of return

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Question 1: Porter Plumbing's stock had a required return of 12.25% 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.)

Select the correct answer.

a. 15.09%

b. 14.29%

c. 14.49%

d. 14.69%

e. 14.89%

Reference no: EM132494387

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