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WACC-Book welghts 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.) b. The firm's weighted average cost of capital using market value weights is % (Round to two decimal places) c. Compare the answers obtained in parts a and b. Explain the differences. (Select the best answer below.) OA. The book value approach yields a lower cost of capital because the costs of the components of the capital structure are calculated using the prevailing market prices. Since the common stock is selling at a higher value than its market value, the cost of capital is much higher when using the book value weights OB. The market value approach yields a higher cost of capital because the costs of the components of the capital structure are calculated using the prevailing market prices. Since the common stock is selling at a higher value than its book value, the cost of capital is much higher when using the market value weights. OC. The book value approach yields a higher cost of capital because the costs of the components of the capital structure are calculated using the prevailing market prices. Since the common stock is selling at a lower value than its market value, the cost of capital is much higher when using the book value weights. OD. The market value approach yields a lower cost of capital because the costs of the components of tho capital structure are calculated using the prevailing market prices Since the common stock is selling at a lower value than its book value, the cost of capital is much lower when using the market value weights Data Table (Click on the loon located on the top right corner of the datatable below in order to copy its contents into a spreadsheet.) After-tax cost Source of capital Long-term debt Preferred stock Common stock equity Totals Book value $4,000,000 40,000 1,000,000 $5,100,000 Market value $3,960,000 55,000 3,996,000 $8,011,000 9% 12% 16%