Blues, Inc. is an MNC located in the U.S. The firm would like to estimate its weighted average cost of capital (WACC). On average, bonds issued by Blues yield 9 percent. Currently, Treasury security rates are 3 percent. Furthermore, Blues stock has a beta of 1.5, and the return on the Wilshire 5000 stock index is expected to be 10 percent. Blues target capital structure is 30 percent debt and 70 percent equity. The tax rate is 20%

a. What is Blues, Inc.s estimated the cost of equity using the CAPM?

b. What is Blues, Inc.s weighted average cost of capital?

c. Blue, Inc.s estimated internal rate of return on a project it is considering is 13 percent. If Blues, Inc. pursues this project, it will finance it in a way that will preserve its current capital structure and WACC. Based on this information, should Blues, Inc. pursue this project

1. Probably yes.
2. Probably no.
3. We do not have enough information.