You are considering purchasing and renovating a duplex. You analysis indicates the based on rental history in the surrounding area the project should produce an IRR of 10 percent. Financing of the project will be accomplished with a mortgage of $90,000 (percent of the net purchase price plus improvements) which represents 60 percent of the project financing. The prevailing borrowing rate for non-owner occupied rental property is 11 percent. The remaining portion of the financing will be your own money raised by selling shares from your stock portfolio which has historically provided an average return of 16 percent. Your marginal tax rate is 35 percent. Should you pursue the project?
a. Yes
b. No
c. Not enough information