Consider the Information Below for Postman Builders Inc A) 1400%
B) 14

question 19

Multiple Choice

Consider the information below for Postman Builders Inc.Suppose that the expected inflation rate and thus the inflation premium increase by 2.0 percentage points, and Postman acquires risky assets that increase its beta by the indicated percentage.What is the firm's new required rate of return? $$\begin{array} { l r } \text { Beta: } & 1.50 \\\text { Required return } \left( \mathrm { r } _ { \mathrm { s } } \right) & 10.20 \% \\\text { RPM: } & 6.00 \% \\\text { Percentage increase in beta: } & 20 \%\end{array}$$

• A) 14.00%
• B) 14.70%
• C) 15.44%
• D) 16.21%
• E) 17.02%

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Definitions:

Issuing Stock

The process by which a company distributes shares to investors for the first time, typically to raise capital for expansion or other corporate activities.

Corporation's Resources

The assets, both tangible and intangible, that a corporation has available for use in the production of goods or the provision of services.

Cost Concept

An accounting principle that states that all goods and services purchased by a business should be recorded at their cost price.

Appraisal

The process of professionally estimating the value of a property, typically performed by a certified appraiser.