Data for Atwill Corporation Is Shown Below

question 83

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?
Initial beta
1) 00
Initial required return (r_s)
10) 20%
Market risk premium,RP_M
6) 00%
Percentage increase in beta
30) 00%
Increase in inflation premium,IP
2) 00%

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

---

Definitions:

Financing Activities

Activities that result in changes in the size and composition of the contributed equity and borrowings of the entity.

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Non-Current Liabilities

Liabilities not due for settlement within 12 months after the reporting period, often including long-term loans, bonds payable, and lease obligations.

Profit After Tax

The net income earned by a company after all taxes have been deducted from total revenue.