14 WACC: Book weights and market weights Webster Company has compiled the information shown in...
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14 WACC: Book weights and market weights Webster Company has compiled the information shown in the following table. After-tax cost Source of capital Long-term debt Preferred stock Common stock equity Totals 6.0% Book value $4,000,000 40,000 1,060,000 $5,100,000 Market value $3,840,000 60,000 3,000,000 $6,900,000 13.0 17.0 a. Calculate the WACC using book value weights. b. Calculate the WACC using market value weights. c. Compare the answers obtained in parts a and b. Explain the differences
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