The Pioneer Petroleum Corporation wants to purchase a new assetcosting $10 million. Their market value capital structure,shown below, is considered to be optimal (assume there is noshort-term debt): Long-term Debt = $12,600,000, Common Equity= $18,900,000, and Total Capital =$31,500,000. Jacksonexpects its earnings (and its dividends) to continue to grow attheir historical rate of 5% per year for the indefinitefuture. The current risk-free rate is 7.8% and the expectedreturn on the S&P 500 Index is 16.25%. Jackson'sappropriate levered equity beta is 0.80. Their bonds arecurrently trading at $1000 per bond, have a par value of $1000, anannual coupon rate of 12%, and a term to maturity of 12years. Thus, the YTM on this bond is consistent with thecurrent Debt Risk Premium between the S&P 500 Composite andlong-term, high-grade bonds of 4.2%. The firm's tax rate is34%.

1. Calculate Pioneer’s cost of equity
2. Calculate Pioneer’s cost of debt
3. Calculate Pioneer's weighted average cost of capital(WACC).