In calculating the weighted average cost of capital, the values used for D, E and V are:
A) book values
B) liquidating values
C) market values
D) none of the above

Question

Quizplus · Accepted Answer

The values used for D, E and V in calculating the weighted average cost of capital should reflect market values. Market values reflect the true cost of capital, so using book values or liquidating values can lead to inaccurate calculations.

In Calculating the Weighted Average Cost of Capital, the Values