Accredited In Business Valuation (ABV) Exam

When using WACC to value a privately held company, how are the weights for debt and equity typically determined?

Using the company's book value of debt and equity only Using market value weights (or targeted capital structure) rather than book value weights Using the industry average debt-to-equity ratio always Using the face value of all outstanding debt instruments

Correct Answer:

Using market value weights (or targeted capital structure) rather than book value weights

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