Project A is different than the normal project that the company has undertaken in the previous years. You have the following observations from the market:

Government T-bills has a tax rate of 40% TSX return is 14% Firm's beta is 0.90

The firm has a tax rate of 40%. A new debt issue is to be sold at par with an 8% coupon

You remember your professor mentioning something about a pure play company in class.

Your research in the market has provided information about a company that is in the same type of industry as project A,,,

Pure play information: Beta 1.2 Debt-to equity ratio 2 Tax rate 35%

A) project A has an IRR of 9.7%., Using a debt to equity ratio of 1 and a risk adjusted cost of capital for project A, would you accept the project?