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In August of 2009 the capital structure of the Emerson Electric Corporation (EMIR) (measured in book and market values) appeared as follows:
Book value Market value
Short-term debt: $1,160,000 $1,160,000
Long-term debt: $11,868,000 $11,868,000
Common equity: $9,129,000 $26,121,000
Total capital: $22,157,000 $39,149,000
What weights should Emerson use when computing the firm’s weighted average cost of capital?
What is the appropriate weight of debt? (Round to one decimal place.)
What is the appropriate weight of common equity? (Round to one decimal place.)
