Assume You Are the Director of Capital Budgeting for an All-Equity

Assume you are the director of capital budgeting for an all-equity firm.The firm's current cost of equity is 17.50%;the risk-free rate is 0.25%;and the market risk premium is 7%.You are considering a new project that has 50% more beta risk than your firm's assets currently have,that is,its beta is 50% larger than the firm's existing beta.The expected return on the new project is 18%.Should the project be accepted if beta risk is the appropriate risk measure? Choose the correct statement.

A) No;a 50% increase in beta risk gives a risk-adjusted required return of 24%.
B) Yes;its expected return is greater than the firm's WACC.
C) No;the project's risk-adjusted required return is 8.13% above its expected return.
D) Yes;the project's risk-adjusted required return is less than its expected return.
E) No;the project's risk-adjusted required return is 9.13% above its expected return.