WACC Assignment | Professional Writing

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: 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, using market value weight is % (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. O B. 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 O C. 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. 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. Fof po O of o of nvestment decision-making process. Data Table in order to copy the contents of the data table below (Click on the icon here into a spreadsheet.) Source of capital Long-term debt Preferred stock Common stock equity Market value $750,000 $50,000 $500,000 Individual cost 5.3% 11.6% 17.6% Print Done

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