Solution-Calculate the weighted average cost of capital

Calculate the weighted average cost of capital using 1 book

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Reference no: EM13573782

Weighted Average Cost of Capital. Valie Enterprises, Inc., has compiled the following investments:

Type of Capital	Book Value	Market Value	After-Tax Cost
Long-term debt	$3,000,000	$2,800,000	4.8%
Preferred stock	102,000	150,000	9.0%
Common stock	1,108,000	2,500,000	13.0%
	$4,210,000	$5,450,000

(a) Calculate the weighted average cost of capital, using (1) book value weights and (2) market value weights. (b) Explain the difference in the results obtained in (a).

Reference no: EM13573782

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Calculate the weighted average cost of capital using 1 book

Reference no: EM13573782

Reference no: EM13573782

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