Webster Company has compiled the following information as shown below: (All in $1,000)

Source of Capital	Book Value	market Value	After-Tax cost
Long Term Debt	$4,000	$3,800	6%
Preferred Equity	100	100	13%
Common Equity	$1,060	$300	18%
Total Value	$5,100	$6,900

Required.

a. Calculate the average cost of capital using book value weights. Show your work.

b.Calculate the weighted average cost of capital using market value weights. Show your work.

c.Compare the answers obtained in a and b, Explain the differences