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10. Pierse Company wants to purchase an asset costing $ 8 million. Cost of equity is 13%. Its before-tax cost of debt is 10.88%. Pierse's
10. Pierse Company wants to purchase an asset costing $ 8 million. Cost of equity is 13%. Its before-tax cost of debt is 10.88%. Pierse's tax rate is 42%. Pierse's market value capital structure, shown below, is considered to be optimal (assume there is no short-term debt): What is Pierse's after-tax weighted average cost of capital? Long-term Debt = $ 32,000,000.00 ; Equity= $ 64,000,000.00 ; Total Capital = $ 96,000,000.00
A. 7.13%
B. 12.29%
C. 10.77%
D. 10.84%
E. Impossible to calculate
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