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P9-13 (similar to) Question Help WACCMarket value weights The market values and after-tax costs of various sources of capital used by Ridge Tool are shown
P9-13 (similar to) Question Help WACCMarket value weights The market values and after-tax costs of various sources of capital used by Ridge Tool are shown in the following table: a. Calculate the firm's weighted average cost of capital. b. Explain how the firm can use this cost in the investment decision-making process. a. The firm's weighted average cost of capital, ra, using market value weights is %. (Round to two decimal places.) Source of capital Long-term debt Preferred stock Common stock equity Market value $850,000 $70,000 $550,000 Individual cost 7.3% 12.5% 15.4%
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