*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		?$160,000		8?%
Preferred stock	40,000		54,000		11?%
Common stock equity	1,060,000		4,060,000		14?%
	Modifying $5,100,000		Modifying $8,274,000

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.