The capital structure weights used in computing the weighted average c

The capital structure weights used in computing the weighted average cost of capital are:

A) constant over time provided that the debt-equity ratio changes in unison with the market values.
B) based on the face value of the firm’s debt.
C) computed using the book value of the long-term debt and the shareholder’s equity.
D) based on the market value of the firm’s debt and equity securities.
E) limited to the firm’s debt and common stock.

ANSWER

D