State of the Economy Current Probability of State of the Economy Rate of Return if State Occurs Boom 10% 25.00% Normal 60% 15.00% Recession 30% -18.00%

2. Historically, Packard projects have had an average beta of 1.3, which indicates the higher risk levels for the firm. Assuming the market risk premium (MRP) currently estimated to be 8.0% and the risk-free rate is 1.20%, what is the required return for an "average" Packard project using based on its average project beta? Show the average required return to 2 decimal places (x.xx%). (6 pts) Expected return for average company project (based on current estimated MRP) =