WACClong dash

Book weights and market weightsWebster Company has compiled the information shown in the followingtable:

Long-term debt $4,000,000 $3,800,000 0.07%

Preferred stock $40,000 $58,000 0.13%

Common stock equity $1,060,000 $4,622,000 0.16%

Totals $5,100,000 $8,480,000 .

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.Thefirm's weighted average cost of capital using book value weights is

nothing

%. (Round to two decimalplaces.)