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Calculating the weights of the types of capital

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Class, in my experience, we use a overall WACC, using market values for debt and equity to calculate the weights.  However, if a specific project is much more or much less risky than the firm overall, I will adjust the WACC up or down accordingly.  The cost of capital should reflect the risk of both the firm overall, and the risk of the specific project.

Class, why would I use market values in calculating the weights of the types of capital?

Reference no: EM131360668

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