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P9-14 (similar to) WACC-Book weights and market weights Webster Company has compiled the information shown in the following table: a. Calculate the weighted average cost
P9-14 (similar to) WACC-Book weights and market weights Webster Company has compiled the information shown in the following table: 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 %. (Round to two decimal places.) Source of capital Long-term debt Preferred stock Common stock equity Totals Book value $4,000,000 40,000 1,060,000 $5,100,000 Market value $3,960,000 60,000 4,070,000 $8,090,000 After-tax cost 6% 11% 14%
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