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Mikkelson Corporation's stock had a required return of 12.00% last year,when the risk-free rate was 3% and the market risk premium was 4.75%.Then an increase in investor risk aversion caused the market risk premium to rise by 2%.The risk-free rate and the firm's beta remain unchanged.What is the company's new required rate of return? (Hint: First calculate the beta,then find the required return. ) Do not round your intermediate calculations.
Present Discounted Value
The value of a stream of future payments discounted at an interest rate.
Expected Profits
Anticipated earnings calculated based on projected revenues, costs, and market conditions.
Interest Rate
The percentage of an amount of money charged for its use over a specified period, often annually, by lenders to borrowers.
Shareholder
An individual or entity that owns one or more shares of stock in a publicly-traded company, making them partial owners.
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