Calculate the Required Rate of Return for Climax Inc

question 27

Multiple Choice

Calculate the required rate of return for Climax Inc. ,assuming that (1) investors expect a 4.0% rate of inflation in the future, (2) the real risk-free rate is 3.0%, (3) the market risk premium is 5.0%, (4) the firm has a beta of 2.50,and (5) its realized rate of return has averaged 15.0% over the last 5 years.Do not round your intermediate calculations.

• A) 16.77%
• B) 20.09%
• C) 21.65%
• D) 15.80%
• E) 19.50%

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