a.	Evaluate the firms capital structure and determine the relative weight of each component in the mix.
	b.	Estimate the opportunity cost of each of the sources of financing and adjust it for the effects of taxes where appropriate.
	c.	Subtract the weighting of preferred stock and reallocate the weighting to equity and debt.
	d.	Calculate the weighted average cost of capital by computing a weighted average of the estimated after-tax costs of the various capital sources used by the firm.
	e.	These are all steps taken to calculate the weighted average cost of capital.