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 7.1%, the cost of preferred stock is at 10.41%, and the cost of equity is at 13.59%. 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?

What is the book value adjusted WACC for DMI?

Current assets 32,327 Current liabilities 0 Long-term assets 66,673 Long-term liabilities Bonds payable 55,000 Owners' equity Preferred stock 14,000 Common stock 30,000 Total assets 99,000 Total liabilities and owners' equity 99,000