Asked by Hunter McGaughey on Jul 13, 2024
Verified
Market values are appropriate because new projects are generally funded with newly raised money.
Market Values
The prevailing price for transactions involving assets or services in the open market.
- Analyze capital structure using market values to calculate the firm's WACC.
Verified Answer
PM
Paige MillerJul 20, 2024
Final Answer :
True
Explanation :
Market values are appropriate because they provide an accurate and current representation of the value of a company's stock or assets, which can be used in the process of raising new funds for projects. Investors are more likely to invest in a company that has a high market value, indicating that the company is in a strong financial position and has the potential for growth. Therefore, market values are often used to determine the amount of funding a company can raise for new projects.
Learning Objectives
- Analyze capital structure using market values to calculate the firm's WACC.
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