3. Bruno's is an all-equity firm with 20,000 shares of stock outstanding. The stock has a beta of 1.3 and a standard deviation of 8 percent. The market risk premium is 6.5 percent and the risk-free rate of return is 2 percent. The company is considering a project which it believes has 20 percent more systematic risk than the firm's current operations. What should the required rate of return be for this project?

A. 11.78 percent B. 12.14 percent C. 12.39 percent D. 12.54 percent E. 12.78 percent