What should the firm set as the required rate of return

Reference no: EM13271449

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? 15.39 percent 13.92 percent 12.54 percent 17.33 percent 17.06 percent

Reference no: EM13271449

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