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6. In the WACC weight calculation, we used the book value of debt as a proxy for the market value of debt. If the
6. In the WACC weight calculation, we used the book value of debt as a proxy for the market value of debt. If the company has low credit quality, does your estimate of the WACC based on the book value of debt overestimate or underestimate the true cost of capital? Does your estimate of the WACC overestimate or underestimate the NPV of your project?
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Understanding financial statements
Authors: Lyn M. Fraser, Aileen Ormiston
9th Edition
136086241, 978-0136086246
