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    Financial Problem: Determing the rate of return.

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    The DMT Company is financed entirely with equity. DMT has a beta of 1.20 and the current risk-free rate of 9.5%. If the expected market return (Km)is 14%, what rate of return should DMT require on a project of average risk? [ke=krf + (km-krf)(B)]

    The following choices are one of the answers:
    a. 14.9%
    b. 15.4%
    c. 14.0%
    d. none of the above

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