Which of these makes this a true statement? When determining the appropriate weights used in calculating a WACC, it should reflect
A) the relative sizes of the total book capitalizations for each kind of security that the firm issues.
B) the relative sizes of the total market capitalizations for each kind of security that the firm issues.
C) only the market after-tax cost of debt.
D) only the market after-tax cost of equity.

Question

Quizplus · Accepted Answer

The Weighted Average Cost of Capital (WACC) calculation uses the market values of equity and debt to determine the relative weights of each type of capital. This approach reflects the current cost of financing from an investor's perspective, making option B correct.

Which of These Makes This a True Statement? When Determining