The common stock of Butterfly Conservation & Construction Inc. (BCCI) has a beta of 0.9. The Treasury bill rate is 4%, and the market risk premium is estimated at 10%. BCCIs capital structure is 40% debt, paying an interest rate of 9%, and 60% equity. The debt sells at par. Buildwell pays tax at 21%.

a. What is BCCIs cost of equity capital? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b. What is its WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

c. If BCCI is presented with a normal project with an internal rate of return of 12%, should it accept the project if it has the same level of risk as the current firm?