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Q8 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

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Q8

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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 3.0%, (3) the market risk premium is 5.0%, (4) the firm has a beta of 2.80, and (5) its realized rate of return has averaged 15.0% over the last 5 years. a) 25.83% b) 22.89% c) 20.58% d) 18.48% e) 21.00%

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