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A company has on its books the following amounts and specific costs of each type of capital. Type of Capital Book Value Market Value Specific
A company has on its books the following amounts and specific costs of each type of capital. Type of Capital Book Value Market Value Specific Costs Debt 400,000 380,000 10% Preference 100.000 110,000 12% Equity 600,000 600,000 15% Tax rate is 40%. Determine the weighted average cost of capital using (a) Book Value weights and (b) Market Value Weights. Can you think of a situation where the weighted average cost of capital would be the same using either of the weights. A company has on its books the following amounts and specific costs of each type of capital. Type of Capital Book Value Market Value Specific Costs Debt 400,000 380,000 10% Preference 100.000 110,000 12% Equity 600,000 600,000 15% Tax rate is 40%. Determine the weighted average cost of capital using (a) Book Value weights and (b) Market Value Weights. Can you think of a situation where the weighted average cost of capital would be the same using either of the weights
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