QUESTION
What is the weighted average cost of debt for Dell using the market value weights? Note you can get the market prices for all debts in the same webpage above, and can adjust the book value of each debt by its market price, for example if the book value of one debt is $1000, while the market price yo
Book-value weights are historical values; theyre calculated by the firm and then recorded on the balance sheet. Obviously, this doesnt happen right as the debt is worth that value these calculation take time, and in all likelihood, by the time the book-value weight
is recorded, the debt is already higher. In this case, market value weights are much more reliable, since it recalculates debt on a continuous basis that accounts for current time.
ANSWER:
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