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Last year, the risk free rate was 5%, the market risk premium was also 5% and ABC Corporations stock had a required return of 12%.

Last year, the risk free rate was 5%, the market risk premium was also 5% and ABC Corporations stock had a required return of 12%. An increase in investor risk aversion caused the market risk premium to increase by 2% this year. If the risk free rate and the firms beta remained unchanged, what is ABC Corporations new required rate of rate?

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