An all-equity firm has a beta of .98.The firm is evaluating a project that will increase the output of the firm's existing product.The market risk premium is 7.3 percent and the risk-free rate is 3.4 percent.What discount rate should be assigned to this expansion project?
A) 8.39%
B) 7.22%
C) 7.15%
D) 10.55%
E) 11.37%
Correct Answer:
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