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

Type of Financing	Book Value			Market Value			Cost
Short-term debt	$	10,000,000		$	11,000,000		4.1	%
Long-term debt		3,000,000			3,000,000		7.2
Common stock		6,000,000			26,000,000		13.8
Total	$	19,000,000		$	40,000,000

The company is in the 35 percent tax bracket and has a target debtequity ratio of 60 percent. The target short-term debt / long-term debt ratio is 20 percent.

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

Weighted average cost of capital

%

d.

Which is the correct WACC to use for project evaluation?

	Market weights
	Book weights
	Target weights