10

Calculate the required rate of return for a company assuming that (1) investors expect a 3.0% rate of inflation in the future, (2) the real risk-free rate is 4%,(3) the market risk premium is 6.5%,(4) the firm has a beta of 1.75, and (5) its realized rate of return has averaged 19.0% over the last 5 years. 14.38% 11.38% 8.38% 15.38% 18.38%