1. ABC Company has on its books the amounts and specific costs shown in the following table for each source of capital. Source of capital Weight Specific cost Long-term debt 40% 0.4 15 % Preferred stock 0.3 30% 12.0% 30% Common stock equity 115.0 % Calculate the weighted average cost of capital Weighted Average cost of capital 0.4*7.5+0.3*12.0+0.3*15.0=11.1 2. ABC Company has on its books the amounts and specific (after-tax) costs shown in the following table for each source of capital. Source of capital Book value weight Specific cost Long-term debt ||$60,000 6.5% 1600001140000-0.428 Preferred stock | 25.000 13.0%250001140000-0.178 Common stock equity 55.000 17.0% 55000X140000-0.392 Total capital ||140,000 a) Calculate the weighted average cost of capital Weighted Average cost of capital 0.428*6.5+0.178*13.0+0.392*17.0-11.76