Find out the WACC based on book values

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Reference no: EM132846173

Question - XYZ Industries has three sources of capital - the equity shares, preference shares and straight debt, costing 18%, 15% and 7% respectively. The proportions of different kinds of capital as reflected in the balance sheet and as per the market values are as under:

Proportions Capital Book value Market value

Equity 75% 65%

Preference 10% 15%

Debt 15% 20%

Find out the WACC based on a) book values b) market values and comment on WACC.

Reference no: EM132846173

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