For a Company That Is Not Planning to Change Its

question 6

Multiple Choice

For a company that is not planning to change its target capital structure, the proportions of debt and equity used in calculating the weighted cost of capital should be based on the current ____ value weights of the individual components.

• A) book
• B) market
• C) replacement
• D) accounting

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Definitions:

Equipment

Equipment consists of the tools, machinery, and other durable assets used in the production of goods or services.

Intangible Benefits

Non-quantifiable advantages provided by goods or services, such as brand reputation or employee satisfaction.

Discount Rate

The rate used within discounted cash flow assessments to ascertain the present-day value of anticipated cash flows.

Net Present Value

A calculation that determines the value of a series of future cash flows in today's dollars, taking into account the time value of money.