Royal Paints Limited is an all-equity firm without any debt.

Royal Paints Limited is an all-equity firm without any debt. It has a beta of 1.21. The current risk-free rate is 8.5 per cent and the historical market premium is 9.5 per cent. Royal is considering a project that is expected to generate a return of 20 per cent. Assuming that the project has the same risk as the firm, should the firm accept the project?