Over the past 34 years, the common stock of The Flower Shopp…

Over the past 34 years, the common stock of The Flower Shoppe has produced an arithmetic average return of 13.74% percent and a geometric average return of 7.32% percent. What is the projected return on this stock for the next 9 years according to Blume’s formula?

Piedmont Hotels is an all-equity company. Its stock has a be…

Piedmont Hotels is an all-equity company. Its stock has a beta of 0.91. The market risk premium is 10.0 percent and the risk-free rate is 1.9 percent. The company is considering a project that it considers riskier than its current operations so it wants to apply an adjustment of 1.5 percent to the project’s discount rate. What should the firm set as the required rate of return for the project?