Finance sound out...?

Here's the request for information..
Calculate required rate of return for Mercury Inc., assuming that investors expect a 5% rate of inflation in the adjectives. The tangible risk-free rate is equal to 3 % and the marketplace risk premium is 5%. Mercury have a beta of 2.0, and its realize rate of return have averaged 15 % over the end 5 years.

The expire answer is 18% but I own no hypothesis how to gain the answer. I don't deduce how the realize rate of return comes contained by and how does the expected 5% inflation rate comes into the picture.

Thanks in credit...

Answers:
This is solved via CAPM theorum:

Required return on equity =
Nominal on the same wavelength marketplace premium + Nominal Risk Free Rate =
Beta(Rm)+R(f) =
2.0(5%) + (5%+3%)

The 5% inflation get added onto the tangible rate (i.e. solid rate + inflation = nominal rate).
The 15% realize return is a bit of a red herring as it is not relevant to answer the quiz.

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