Nob-Orrow Inc. is considering an investment in a project that is similar in risk to its existing projects. The firm makes no use of debt and is entirely financed by common stock with a beta of 1.1. The expected return on the market portfolio is 11 percent and the risk-free rate is 6 percent. The required rate of return on this project is:

a. 12.1%

b. 5%

c. 11.5%

d. 11%

e. none of the above

Calculate the required return on a stock that just paid a $1 dividend, has a current price of $500, and a permanent growth rate of 5 percent:

	a.	6.20%
	b.	0.20%
	c.	5.21%
	d.	5.00%
	e.	none of the above