Gallas Corporation is considering buying a machine with an internal rate of return (IRR) of \( 12.6 \% \). Given the information shown in Table 11M, Should the company accept the project?

Table 11M - Gallas Corporation

Capital structure is \( 60 \% \) debt, \( 40 \% \) equity. Gallas will finance solely out of debt and retained earnings. Cost of debt \( =8 \% \). Risk-free rate of interest \( =5 \% \). Expected return on the market portfolio is \( 14 \% \). Gallas's beta \( =1.25 \).