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Book value versus market value components. The CFO of DMI is trying to determine the company's WACC. Brad, a promising MBA, says that the company
Book value versus market value components. The CFO of DMI is trying to determine the company's WACC. Brad, a promising MBA, says that the company should use book value to assign the WACC components' percentages. Angela, a long-time employee and experienced financial analyst, says that the company should use market value to assign the components' percentages. The after-tax cost of debt is at 7.8%, the cost of preferred stock is at 12.59%, and the cost of equity is at 17.15%. Calculate the WACC using both the book value and the market value approaches with the information in the popup window: Which do you think is better? Click on the Icon in order to copy its content into a spreadsheet. Market Information
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