Financial Rations
1 What weights should Jefferson use when computing the firm’s weighted average cost of capital We should always prefer Market Value over Book Value Weight of debt = (Short-term debt + Long-term debt)/Total Capital = (1,221,000+11,927,000)/ 39,318,000 = 33.44% Weight of Equity = Common Equity/ Total Capital = 26,170,000/39,318,000 = 66.55% Weights based on market value Liabilities […]