When possible,investors and analysts prefer to use book value to market value for estimating the WACC.

Question

Quizplus · Accepted Answer

Investors and analysts prefer to use market value rather than book value for estimating the WACC because market value reflects the current market perception of a company's risk and return, whereas book value only reflects historical costs and accounting measures. Market value takes into account current market conditions and future expectations, making it more accurate for estimating the cost of capital.

When Possible,investors and Analysts Prefer to Use Book Value to Market