You have a project that will involve the purchase of real estate and renovation of the real estate.

Your analysis indicates the project will have an IRR of 10 percent. Financing will consist of a mortgage (debt) of $90,000 dollars which represents 20 percent of the financing. The pretax cost of debt is estimated to be 8.5 percent. The remaining proportion of the financing will come from selling shares of your stock portfolio. Historically, your return has been 11 percent. Your marginal tax rate is 21 percent.

Should you pursue the project?