A corporation is considering a capital project for the coming year.

 

 Source of Capital                Proportion     After‑tax cost

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 Long‑term debt                                   .40                      10 % 

 Preferred stock                       .10                      15 % 

 Common stock equity             .50                      20%

The project has an internal rate of return of 14 percent.  If the firm has the target capital structure and costs, what should their decision be and why?