Piedmont Hotels is an all$-$equity company. Its stock has a beta of $.85.$ The market risk premium is $7\mathrm{.}2$ percent and the risk$-$free rate is $4\mathrm{.}2$ percent. The company is considering a project that it considers riskier than its current operations so it wants to apply an adjustment of $2\mathrm{.}0$ percent to the project's discount rate. What should the firm set as the required rate of return for the project?

Multiple Choice

$10\mathrm{.}32\%$

$8\mathrm{.}75\%$

$12\mathrm{.}32\%$

$8\mathrm{.}32\%$

$6\mathrm{.}75\%$