Assume that you are on the financial staff of Vander Inc., and you have collected the following data: The yield on the companys outstanding bonds is 7.75%, its tax rate is 40%, the next expected dividend is 0.65 a share, the dividend is expected to grow at a constant rate of 6.00% a year, the price of the stock is 15.00 per share, and the target capital structure is 45% debt and 55% common equity. Instructions:

1. Calculate the companys weighted average cost of capital (WACC). (15 points) 2. If the company is considering an average risk project with an internal rate of return of 10%, should it accept the project? Explain. (5 points)