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Sky Motors, based in Austin, TX, is considering opening a manufacturing plant in Mexico. Skys weighted average cost of capital in the U.S. is 12%.

Sky Motors, based in Austin, TX, is considering opening a manufacturing plant in Mexico. Skys weighted average cost of capital in the U.S. is 12%. The current risk-free rate is 2% in the U.S. and 8% in Mexico. If interest rate parity holds, what is the firms peso WACC?

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