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Why Do We Use Market Values Rather Than Book Values

question 71

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Why do we use market values rather than book values in calculation of WACC?


Definitions:

Contingent Liability

A potential financial obligation that may arise depending on the outcome of a future event.

Payroll

The total amount of wages paid by a company to its employees for a set period of time.

Known Liability

Obligations or debts that have been incurred and are measurable with a high degree of certainty.

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