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WACC-Book weights and market weights Webster Company has compiled the information shown in the following table: EEB a. Calculate the weighted average cost of capital
WACC-Book weights and market weights Webster Company has compiled the information shown in the following table: EEB 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. 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 Mt value After-tax cost 2 Long-term debt Preferred stock Common stock equity 1,060,000 Totals $4,000,000 $3,840,000 60,000 3,000,000 5,100,000$6,900,000 6% 13% 17% 40,000
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