Weighted average cost of capital using book value weights

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Reference no: EM132051309

WACC---Book weights and market weights???

Webster Company has compiled the information shown in the following? table

Book Value Market Value After-tax cost

Long-term debt $4,000,000 $4,040,000 9%

Preferred stock $40,000 $55,000 11%

Common stock equity $1,060,000 $3,434,000 15%

Totals $5,100,000 $7,529,000

a. Calculate the weighted average cost of capital using book value weights.

b. Calculate the weighted average cost of capital using market value weights.

Reference no: EM132051309

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