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Market values and? after-tax costs of various sources of capital used by Ridge Tool are shown in the following? table: Long-term debt $750,000   7

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

Long-term debt $750,000   7.5%

Preferred stock $60,000     11.9%

Common stock equity $450,000 15.5%

1) Calculate the? firm's weighted average cost of capital.

2) Explain how the firm can use this cost in the investment? decision-making process.