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. 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 a Calculate the firm's WACC. (2 pts) b. Explain how the firm can use this cost in the investment decision-making process