Dean LL hired you as a consultant to help decide on an expansion project. The firm's cost structure consists of 55% debt and 45% equity. The cost of equity is 10%. The firm's debt consist of bonds that have an 8% coupon (paid semi-annually) and have 20 years to maturity. The bonds are currently selling at $950 and have a face value of $1000. The firm's tax rate is 30%.

1. What is the company's WACC? Show all your work.
2. The company is expanding and the IRR of the expansion project is 8 percent. Should the project be accepted or rejected? why? Explain.
3. Suppose the firm's tax rate decreases to 25%. Do you expect this to affect the expansion decision? Why or why not?