Purchase Solution

Financial Problem: Determing the rate of return.

Not what you're looking for?

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

Solution Summary

The rate of return is determined. The response received a rating of "5" from the student who posted the question.

Solution provided by:
Education
• BE, Bangalore University, India
Recent Feedback
• "What does 1 and 0 means in the repair column?"
• "Went through all of the formulas, excellent work! This really helped me!"
• "try others as well please"
• "Thank you, this helped a lot. I was not sure how to plug in those numbers to a formula. This was a great help. Now I have to figure out how to explain cost of capital is used in net present value analysis, and how cost of capital is used in net present value analysis. This stuff gets confusing."

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.