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Lennox Corporation's stock had a required return of 7.90% last year, when the risk-free rate was 2.50% and the market risk premium was 4.50%.Then an
Lennox Corporation's stock had a required return of 7.90% last year, when the risk-free rate was 2.50% and the market risk premium was 4.50%.Then an increase in investor risk aversion caused the market risk premium to rise by 1.25% from 4.50% to 5.75%. The risk-free rate and the firm's beta remain unchanged.What is the company's new required rate of return?
a.8.125%
b.8.375%
c.8.650%
d.9.100%
e.9.400%
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