Finance theory favors the use of ____________ value weights in the calculation of the weighted average cost of capital.
A)book
B)future
C)market
D)none of the above

Question

Quizplus · Accepted Answer

Finance theory suggests that market value weights should be used in the calculation of the weighted average cost of capital. This is because the market value of a firm's equity and debt reflects the current market perception of their true value, and therefore, the capital raised from these sources represents the actual amount available to the firm for use in investment decisions. Using market value weights provides a more accurate representation of the cost of capital and helps in making better financial decisions.

Finance Theory Favors the Use of ____________ Value Weights in the Calculation