Determine the required return for swifty

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You are forecasting the returns for Swifty Company, a plumbing supply company, which pays a current dividend of $10.60. The dividend is expected to grow at a rate of 3.6 percent. You have identified two public companies, Nash and Crane, which appear to be comparable to Swifty. Nash has the same total risk as Swifty and a beta of 1.50. Crane, in contrast, has a very different total risk but the same market risk as Swifty. Crane's beta is 1.30. The market risk premium is 4.80 percent and the risk-free rate is 1.30 percent.

Determine the required return for Swifty using the appropriate beta. (Round answer to 3 decimal places, e.g. 3.361%.)

Reference no: EM132686933

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