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The capital structure weights used in computing a firm's weighted average cost of capital:_________.
A. Are based on the book values of the firm's debt and equity.
B. Are based on the market values of the firm's debt and equity securities.
C. Depend upon the financing obtained to fund each specific project
D. Remain constant over time unless the firm issues new securities
E. Are restricted to the firm's debt and common stock.

Respuesta :

Tundexi

Answer:

B. Are based on the market values of the firm's debt and equity securities.

Explanation:

The capital structure weights do not normally remain constant, since retained earnings, an essential component of equity capital, would keep changing from year to year, thereby changing the overall capital structure and the respective weights. Weighted Average Cost of Capital (WACC) is the overall costs of capital and is based on your current capital structure.

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