Webster has compiled the information shown in the followingtable:

Long-term debt $4,000,000 $3,960,000 0.08%

Preferred stock $40,000 $54,000 0.11%

Common stock equity $1,060,000 $3,689,000 0.15%

Totals $5,100,000 $7,703,000

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.

All the information is there.