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WACCMarket value weightsThe market values and after-tax costs of various sources of capital used by Ridge Tool are shown in the following table: LOADING... .

WACCMarket

value weightsThe market values and after-tax costs of various sources of capital used by Ridge Tool are shown in the following table:

LOADING...

.

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.

DATA:

Long-term debt 750,000 0.059 Preferred stock 80,000 0.118 Common stock equity 650,000 0.165

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