A. 16.0% is the New Company investors' required rate of return.

B. 12.0% is the difference between the New Company's investors' required rate of return and the risk-free rate.

C. 4% is the risk-free rate. U.S. Treasury securities are usually considered to be risk-free, and their rate is the risk-free rate.

D. The first step in answering this question is to calculate the expected return to the market. The return to the market can be calculated using the information given and the Capital Asset Pricing Model. The CAPM formula is:r = rf + β(rm - rf)All the required information for the model except rm is given in the problem. Since we have only one unknown, rm, we can solve this equation for rm. Plugging the numbers into the formula, we get:.16 = .04 + 1.5(rm - .04)Simplifying and solving for rm:.16 = .04 + 1.5rm - .06.16 =  -.02 + 1.5rm.18 = 1.5rmrm = .12 or 12.0%The market risk premium is (rm - rf). Therefore, the market risk premium is .12 - .04, which is .08 or 8%.