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Hargrave Electric's stock had a required return of 12.00% last year, when the risk-free rate was 3% and the market risk premium was 4.75%. Then
Hargrave Electric's stock had a required return of 12.00% last year, when the risk-free rate was 3% and the market risk premium was 4.75%. Then an increase in investor risk aversion caused the market risk premium to rise by 4%. The risk-free rate and the firm's beta remain unchanged. What is the company's new required rate of return? (Hint: First calculate the beta, then find the required return.) Do not round your intermediate calculations.
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