Average cost of capitol using book value weights

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Ridge tool has on its books the amounts and specific (after-tax) costs shown in the following table for each source capitol: Long-term debt: Book value: $750000 Individual cost: 7.6% Preferred Stock: $80,000 Individual cost: 11.4% Common Stock equity: $550000 Individual cost: 16.9% A. Calculate the firms weighted average cost of capitol using book value weights B. Explain how the firm can use this cost in the investment decision-making process.

Reference no: EM131921596

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