Piedmont hotels is an all-equity firm with 60000 shares of, Ask an Expert

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Piedmont Hotels is an all-equity firm with 60,000 shares of stock outstanding. The stock has a beta of 1.27 and a standard deviation of 13.8 percent. The market risk premium is 9.1 percent and the risk-free rate of return is 4.5 percent. The company is considering a project that it considers riskier than its current operations so it wants to apply an adjustment of 1 percent to the project's discount rate.

Required:

Question: What should the firm set as the required rate of return for the project?

13.92 percent
15.39 percent
12.54 percent
17.33 percent
17.06 percent

Note: Please provide reasons to support your answer.

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Category:- Basic Finance
Reference No.:- M91147962

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