Data for Dana Industries is shown below. Now Dana acquires some risky assets that cause its beta to increase by 30.0%. In addition, expected inflation increases by 0.80%. What is the stock's new required rate of return? Do not round your intermediate calculations. Initial beta1.00 Initial required return (rs)10.20% Market risk premium, RPM6.00% Percentage increase in beta30.00% Increase in inflation premium, IP0.80% ?
A. 12.80%
B. 15.87%
C. 16.00%
D. 9.98%
E. 11.90%
Answer: A
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