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, r, using market value weights is 0% (Round to two decimal places.) b. Explain how the firm can use this cost in the investment decision-making process. (Select the best answer below.) O A. The WACC is the rate of return that the firm must receive on long-term projects to maintain the value of the firm. The cost of capital can be compared to the return for a project to determine whether the project is acceptable, OB. The WACC is the rate of return that the firm must not exceed on long-term projects to maintain the value of the firm. The cost of capital can be compared to the return for a project to determine whether the project is acceptable. OC. The WACC is the rate of return that the firm must exceed on long-term projects to maintain the value of the firm. The cost of capital can be compared to the dollar value for a project to determine whether the project is acceptable. OD. The WACC is the rate of return that the firm must receive on short-term projects to maintain the value of the firm. The cost of capital can be compared to the dollar value for a project to determine whether the project is acceptable. Source of capital Long-term debt Preferred stock Common stock equity Market value $700,000 $90,000 $500,000 Individual cost 5.8% 11.4% 14.1%