Final answer:
The correct term for the calculation that combines the weighted costs of debt and equity to represent a firm's total cost of capital is the weighted average cost of capital (WACC).
Step-by-step explanation:
The answer to the student's question is B) weighted average cost of capital (WACC). The WACC is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted. It includes the cost of debt and the cost of equity. WACC is a financial metric that represents the average rate of return a company needs to earn on its investments in order to cover its funding costs. It is calculated by multiplying the proportion of debt and equity in the company's capital structure with their respective costs. The WACC is formulated as follows: (percentage of debt × cost of debt) + (percentage of equity × cost of equity). This calculation is used by a firm to evaluate investment projects, as it represents the minimum return that investors expect for providing capital to the company.