# Discount rate question?

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You are considering the purchase of real estate in the British Properties. It is expected to provide perpetual income that should average $50,000 per year. The Treasury bill rate is 5 percent, and the expected market risk premium is 7 percent. You believe its market risk is the same as it is for the market portfolio.
If the Treasury bill rate were to increase to 8 percent, what would the discount rate for this potential investment be?
Discount rate would be the required return right, so is it: 8% + 1 x 7% = 15%?
Please provide an explanation for you answer, that would really help me understand this problem! Thanks in advance!
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