The following information is provided for company A. There is a new opportunity to invest in project A. Project manager believes the riskiness of this project is similar to the average risk of the company.

Book Asset	100
Book Liability	60
Book Equity	40
Market Asset	150
Market Liability	50
Market Equity	100
Debt beta	0.2
Equity beta	1.2
Corporate tax rate	35%
YTM on corporate issued bonds	5.50%
Yield on long-term Government bond	2.60%
Government bond risk-premium	2%
Market risk premium	6%

	0	1	2	3	4
Project Cash flow	-100	30	40	40	30

1. Calculate the company cost of capital and after-tax WACC. Note the project cash flow is multi-year thus we need to calculate long-term risk-free rate.

2. Based on the after-tax WACC calculated in a) should you accept or reject the project?