You are a manger of the Lowell Fund and manage a portfolio of $21 million. Your portfolio has a beta of 1.2 and required return of 12 percent. You receive $4 million additional to invest in the portfolio, and you invest it in a stock with a beta of 1.6. The risk-free rate is 5 percent. What is the required return on the new portfolio?

9.42%

5.80%

1.26%

3.81%

12.37%

10.78%