(Defining capital structure weights) In August 2015 the capital structure of the Emerson Electric Corporation (EMR) (measured in book and market values) was as follows:

($ Millions) Book Value Market Value Short-term debt $ 2,553 $ 2,553 Long-term debt 4,289 4,289 Common equity 8,081 35,690 Total capital $14,923 $42,532 What weights should Emerson use when computing the firm’s weighted average cost of capital?

Estimating the Cost of Individual Sources of Capital