1. BLUE HERON COMPANY RISK ANALYSIS. The Blue Heron, Folly Beach, the nations premier bed and breakfast is considering an expansion. The expected real rate of return is 4%, the market risk premium is 6%; inflation is expected to run at 3% annually, and the Blue Herons beta is 1.25. If the expansion will increase the size of the Blue Heron by 50% and the beta of the expansion project is 2.0, estimate the required return for the Blue Heron assuming the expansion project is accepted.