For a given company, the risk-free rate is 2.5%, the beta for the stock is 1.5, the expected market risk premium is 5%, the yield to maturity on debt is 6%, the tax rate is 30%, and the weighted average cost of capital is 8%. What required rate of return should be used to calculate the net present value of an average project for this company?

4.2%

7.5%

8%

10%