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Sagot :
Ideally, we should use book values in the weighted average cost of capital this statement is true. Here option A is the correct answer.
The weighted average cost of capital (WACC) is the total cost of the company's financial resources. It is determined by giving each financial item a certain weight.
This is going to be based on market value since book values only reflect the issue price, but market values consider the price it will bring today and, as a result, the price at which consumers will purchase it.
The cost component of these products is determined by the projected return of investors keeping them. Market values should thus be employed more frequently.
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