In computing the weighted average cost of capital, from a strictly theoretical point of view, the preferred weighing scheme is target market value proportions.

Question

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Target market value proportions provide a more accurate representation of a company's capital structure and the costs associated with it, as it takes into account the actual market value of each component of capital (such as equity and debt) rather than simply accounting/book values.

In Computing the Weighted Average Cost of Capital, from a Strictly