Honest Abe's Is a Chain of Furniture Retail Stores

Honest Abe's is a chain of furniture retail stores.Integral Designs is a furniture maker and a supplier to Honest Abe's.Honest Abe's has a beta of 1.38 as compared to Integral Designs' beta of 1.12.Both firms carry no debt,i.e.,are 100% equity-financed.The risk-free rate of return is 3.5 percent and the market risk premium is 8 percent.What discount rate should Honest Abe's use if it considers a project that involves the manufacturing of furniture?

A) 12.46 percent
B) 12.92 percent
C) 13.50 percent
D) 14.08 percent
E) 14.54 percent
F) None of the above.