What should the firm set as the required rate

Reference no: EM13271311

Piedmont Hotels is an all-equity firm with 60,000 shares of stock outstanding. The stock has a beta of 1.27 and a standard deviation of 13.8 percent. The market risk premium is 9.1 percent and the risk-free rate of return is 4.5 percent. The company is considering a project that it considers riskier than its current operations so it wants to apply an adjustment of 1 percent to the project's discount rate. What should the firm set as the required rate of return for the project?

13.92 percent
15.39 percent
12.54 percent
17.33 percent
17.06 percent

Reference no: EM13271311

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