Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question content area top Part 1 WACClong dashBook weights and market weights
Webster
Company has compiled the information shown in the following table: Long-term debt $4,000,000
$3,840,000 0.06% Preferred stock $40,000 $60,000 0.13% Common stock equity $1,060,000 $
3,000,000 0.17% Totals $5,100,000 $6,900,000 a. Calculate the weighted average cost of
capital using book value weights. b. Calculate the weighted average cost of capital using
Compare the answers obtained in parts a and b. Explain the
market value weights. c.
differences.
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Transcribed Image Text:Question content area top Part 1 WACClong dashBook weights and market weights Webster Company has compiled the information shown in the following table: Long-term debt $4,000,000 $3,840,000 0.06% Preferred stock $40,000 $60,000 0.13% Common stock equity $1,060,000 $ 3,000,000 0.17% Totals $5,100,000 $6,900,000 a. Calculate the weighted average cost of capital using book value weights. b. Calculate the weighted average cost of capital using Compare the answers obtained in parts a and b. Explain the market value weights. c. differences.
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