RKKL Is Considering Buying a Company That Has No Leverage

question 24

Multiple Choice

RKKL is considering buying a company that has no leverage but an asset beta of.7. The market risk premium is 6% and the risk-free rate is 2%. If they plan to use 75% debt, what will the required rate of return be?

• A) 18.8%
• B) 6.2%
• C) 8.0%
• D) 14.6%

---

Definitions:

Registrations

Registrations refer to the act of enrolling or registering in a system, event, or database, often requiring the submission of personal or professional information.

Signify

To represent, stand for, or denote something, often through symbols or signs.

Production Capability

A measure of the maximum output or production level that a company can sustainably achieve.