Data for Dana Industries Is Shown Below A) 1400%
B) 14

question 55

Multiple Choice

Data for Dana Industries is shown below. Now Dana 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? $$\begin{array} { l r r } \text { Initial beta } & 1.00 & \\\text { Initial required return } \left( \mathrm { r } _ { \mathrm { s } } \right) & & 10.20 \% \\\text { Market risk premium, } \mathrm { RP } _ { \mathrm { M } } && 6.00 \% \\\text { Percentage increase in beta } && 30.00 \% \\\text { Increase in inflation premium, IP } & &2.00 \%\end{array}$$

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

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