Bolero, Inc., has compiled the following information on its financing costs:

Type of Financing	Book Value			Market Value			Cost
Short-term debt	$	11,900,000		$	12,900,000		6.0	%
Long-term debt		4,900,000			4,900,000		9.1
Common stock		7,900,000			27,900,000		15.7
Total	$	24,700,000		$	45,700,000

The company is in the 40 percent tax bracket and has a target debtequity ratio of 70 percent. The target short-term debt/long-term debt ratio is 15 percent.

a.	What is the companys weighted average cost of capital using book value weights? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Weighted average cost of capital

%

b.	What is the companys weighted average cost of capital using market value weights? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Weighted average cost of capital

%

c.	What is the companys weighted average cost of capital using target capital structure weights? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Weighted average cost of capital

%

d.

Which is the correct WACC to use for project evaluation?

	Target weights
	Market weights
	Book weights