When computing a firm's cost of capital, book values should be used be used because they are more objective.

Name: When computing a firm's cost of capital, book values should be used be used because they are more objective.
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Question

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Book values are based on historical accounting transactions and may not reflect the current market value of a firm's assets and liabilities. Market values should be used instead for a more accurate calculation of cost of capital.

When Computing a Firm's Cost of Capital, Book Values Should