Nagel Equipment Has a Beta of 0

question 20

Multiple Choice

Nagel Equipment has a beta of 0.88 and an expected dividend growth rate of 4.00% per year.The T-bill rate is 4.00%,and the T-bond rate is 5.25%.The annual return on the stock market during the past 4 years was 10.25%.Investors expect the average annual future return on the market to be 14.75%.Using the SML,what is the firm's required rate of return? Do not round your intermediate calculations.

• A) 13.61%
• B) 11.57%
• C) 12.25%
• D) 14.70%
• E) 12.11%

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