Oakdale Furniture Inc

question 80

Multiple Choice

Oakdale Furniture Inc. has a beta coefficient of 0.7 and a required rate of return of 15 percent. The market risk premium is currently 5 percent. If the inflation premium increases by 2 percentage points, and Oakdale acquires new assets which increase its beta by 50 percent, what will be Oakdale's new required rate of return?

• A) 13.50%
• B) 22.80%
• C) 18.75%
• D) 15.25%
• E) 17.00%

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