WACC-Book weights and market weights Webster Company has compiled the information shown in the following table: B a. Calculate the weighted average cost of capital using book value weighls. 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.) O A. 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. OB. 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. O C. 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 the 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 icon located on the top-right comer of the data table below in order to copy ils contents into a spreadsheet.) Click to select your answer's). 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 3,477,000 $7,497.000 After-tax cost 8% 13% 16%