Calculate the required rate of return for Climax Inc., assuming that (1) investors expect a 4.0% rate of inflation in the future, (2) the real risk-free rate is 2.9%, (3) the market risk premium is 4.6%, (4) the firm has a beta of 1.70, and (5) its realized rate of return has averaged 15.0% over the last 5 years. Do not round your intermediate calculations.

a. 10.72%

b. 14.72%

c. 11.82%

d. 11.50%

e. 19.55%