Clarion Keg is considering investment in a new product line. The firm's cost of capital is 15.0% and the risk-free rate is 2.75%. The project has a risk index of 1.3. The firm uses the following equation to determine the risk adjusted discount rate, RADR, for each project: RADR = Rf + Risk Index * (Cost of capital - Rf)

The discount rate that should be used in the net present value calculation to compensate for risk is ________. Express your answer as xx.xx percent without the % sign.