Guide Post Inc.$\text{'}$s annual report shows the liabilities and equity below $($in $ millions$)$ on its balance sheet.

Guide Post's long$-$term debt consists of bonds that are priced at their par value with a yield to maturity of $5\%.$ The

firm has no preferred stock outstanding. Guide Post has $20$ million common shares outstanding with a market

price of $$100$ per share. Based on the CAPM, the expected return on the company's common equity is $11\mathrm{.}2\%.$

The firm's tax rate is $30\%.$

a$)(7$ points$)$ What is Guide Post's weighted average cost of capital $($WACC$)$ based on this information?

b$)(3$ points$)$ The New Product team has proposed a project that you determine to have an IRR of $9\%.$ Would

you recommend the firm invest in this project? Based on your answer to part a$),$ briefly explain.