Data for Atwill Corporation Is Shown Below A) 1400%
B) 14

question 20

Multiple Choice

Data for Atwill Corporation is shown below.Now Atwill acquires some risky assets that cause its beta to increase by 30%.In addition, expected inflation increases by 2.00%.What is the stock's new required rate of return? $\begin{array}{lr}\text { Initial beta } & 1.00 \\\text { Initial required return }\left(\mathrm{r}_{\mathrm{s}}\right) & 10.20 \% \\\text { Market risk premium, RPM } & 6.00 \% \\\text { Percentage increase in beta } & 30.00 \% \\\text { Increase in inflation premium, IP } & 2.00 \%\end{array}$

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

---

Definitions:

Treasury Stock

Shares that were issued and later reacquired by the issuing corporation.

Par Value

The nominal or face value of a bond, share, or other financial instrument, as stated by the issuer.

Income Statement

The income statement is a financial report that shows a company's revenues, expenses, and profits or losses over a specific period of time.

Treasury Stock-Common

Shares that were once outstanding and have been bought back by the issuing company, reducing the amount of available stock on the open market.