Bosco, Inc. has a beta coefficient of 1.5 and a required rate of return of 17%. The market risk premium is currently 5%. If inflation premium increases by 3 percentage points and Bosco invests in a new project which increases its beta ka corcont what vill be th

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Bosco, Inc. has a beta coefficient of 1.5 and a
required rate of return of 17%. The market risk
premium is currently 5%. If inflation premium
increases by 3 percentage points and Bosco
invests in a new project which increases its beta by
70 percent, what will be the company's new
required rate of return according to the CAPM?
Transcribed Image Text:Bosco, Inc. has a beta coefficient of 1.5 and a required rate of return of 17%. The market risk premium is currently 5%. If inflation premium increases by 3 percentage points and Bosco invests in a new project which increases its beta by 70 percent, what will be the company's new required rate of return according to the CAPM?
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