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, rg, using market value weights is 10.04 %. (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 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. B. 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 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. OD. 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. X Data Table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Source of capital Market value Individual cost Long-term debt $700,000 5.4% Preferred stock $30,000 9.5% Common stock equity $450,000 17.3% Print Done