The market value weights are preferred when calculating a firm's weighted average cost of capital.

Question

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The market value weights are preferred when calculating a firm's weighted average cost of capital because they reflect the true value of the firm's capital structure, taking into account the current market prices of the firm's securities. This approach is considered more accurate than using book value weights, which only reflect historical accounting values and may not accurately reflect the firm's current financial situation.

The Market Value Weights Are Preferred When Calculating a Firm's