Weights used to calculate the weighted average cost of capital K_a are derived from the optimum capital structure.

Question

Quizplus · Accepted Answer

The weights used to calculate the WACC are derived from the optimum capital structure, which means that they represent the proportion of each type of capital that a company should have in its capital structure to minimize its cost of capital. Therefore, the statement is true.

Weights Used to Calculate the Weighted Average Cost of Capital