The weights used to calculate WACC should not reflect the market values of each capital source as a proportion of the total market value of all capital sources.

Question

Quizplus · Accepted Answer

The weights used to calculate WACC should reflect the market values of each capital source as a proportion of the total market value of all capital sources. This is because the cost of each capital source is dependent on the market value of that source, and using incorrect weights would result in an inaccurate calculation of WACC.

The Weights Used to Calculate WACC Should Not Reflect the Market