Webster Company has compiled the information shown in the following table:

Source of capital	Book value		Market value		After-tax cost
Long-term debt	$4,000,000		$4,080,000		88%
Preferred stock	40,000		65,000		12%
Common stock equity	1,060,000		4,251,000		15%
Totals	Modifying $ 5,100000 with double underline$5,100,000		Modifying $ 8,396,000 with double underline $8,396,000

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.