You are the CFO and your team has developed the weightedaver

You are the CFO and your team has developed the weightedaverage cost of capital that is used to evaluate capital projects. Theiranalysis generated a WACC of 15 percent. The COO is very interested in aproject that has an IRR of 13 percent. He makes the statement that the WACC isirrelevant, because the project could be financed with money available to beborrowed through an unused two-year debt facility with an interest rate of 7percent, which is significantly less than the 15 percent cost of capital. Healso defends the project by saying this is a one-time opportunity that willbring more jobs into the community which will bring immeasurable goodwilltoward the company. How would you respond to the COO’s comments?