Question
P9-14 (similar to) Question Help WACCBook weights and market weightsWebster Company has compiled the information shown in the following table: LOADING... .a.Calculate the weighted average
P9-14 (similar to) | Question Help
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WACCBook
weights and market weightsWebster Company has compiled the information shown in the following table:
LOADING...
.a.Calculate the weighted average cost of capital using book value weights.
b.Calculate the weighted average cost of capital using market value weights.
c.Compare the answers obtained in parts a and b. Explain the differences.
a.The firm's weighted average cost of capital using book value weights is nothing%. (Round to two decimal places.)
DATA TABLE:
(Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)
Source of capital | Book value | Market value | After-tax cost |
| |||
Long-term debt | $4,000,000 | $4,040,000 | 7% | ||||
Preferred stock | 40,000 | 58,000 | 12% | ||||
Common stock equity | 1,060,000 | 4,728,000 | 14% | ||||
Totals | $5,100,000 | $8,826,000 |
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