RSES

The Paulson Company's year$-$end balance sheet is shown below. Its cost of common equity is long$-$term debt sells at par value. The firm's total debt, which is the sum of the company's short$-$term debt and long$-$term debt, equals $$1,172.$ The firm has $576$ shares of common stock outstanding that sell for $$4\mathrm{.}00$ per share.

$\backslash$table$[[$Assets$,$Liabilities And Equity$],[$Cash$,$$$120,$Accounts payable and accruals,$$10$

HR Industries $($HRI$)$ has a beta of $1\mathrm{.}2$; LR Industries's $($LRI$)$ beta is $0\mathrm{.}8.$ The risk$-$free rate is $6\%,$ and the required rate of return on an average stock is $13\%.$ The expected rate of inflation built into $r_{RF}$ falls by $1\mathrm{.}5$ percentage points, the real risk$-$free rate remains constant, the required return on the market falls to $10\mathrm{.}5\%,$ and all betas remain constant. After all of these changes, what will be the difference in the required returns for HRI and LRI? Do not round intermediate calculations. Round your answer to two decimal places.

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