Question
WACC: Market value weights The market values and after-tax costs of various sources of capital used by Ridge Tool are shown in the following table.
WACC: Market value weightsThe market values and after-tax costs of various sources of capital used by Ridge Tool are shown in the following table.
Source of capital - Market value - Individual cost
Long-term debt - $700,000 - 5.3%
Preferred stock- 50,000 - 12.0
Common stock equity -650,000 - 16.0
- Calculate the firm's WACC.
- Explain how the firm can use this cost in the investment decision-making process.
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Contemporary Financial Management
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
10th Edition
978-0324289114, 0324289111
