Principles of Managerial Finance, Student Value Edition (15th Edition) (The Pearson Series in Finance)
15th Edition
ISBN: 9780134478166
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Chapter 9, Problem 9.13P
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.
| Source of capital | Market value | Individual cost |
| Long-term debt | $700,000 | 5.3% |
| 50,000 | 12.0 | |
| Common stock equity | 650,000 | 16.0 |
- a. Calculate the firm’s WACC.
- b. Explain how the firm can use this cost in the investment decision-making process.
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Chapter 9 Solutions
Principles of Managerial Finance, Student Value Edition (15th Edition) (The Pearson Series in Finance)
Ch. 9.1 - What is the cost of capital?Ch. 9.1 - Prob. 9.2RQCh. 9.1 - Prob. 9.3RQCh. 9.1 - What are the typical sources of long-term capital...Ch. 9.2 - Prob. 9.5RQCh. 9.2 - Prob. 9.6RQCh. 9.2 - Prob. 9.7RQCh. 9.3 - How would you calculate the cost of preferred...Ch. 9.4 - What premise about share value underlies the...Ch. 9.4 - How do the constant-growth valuation model and...
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