Question
a company has a market value of equity divided by book value of equity that is greater than 1.0. if this company uses book value
a company has a market value of equity divided by book value of equity that is greater than 1.0. if this company uses book value of equity to determine their WAXX, they will derive a value that is ___ the market based WACC. Because ___
a. less than; the ration of debt to equity will be less than if the ration was based on market values
b. greater than; the ratio of debt to equity will be less than if the ratio was based on market values
c. equivalent to; the ratio of debt to equity is the same whether book values or market values are used
d. less than; the ratio of debt to equity will be greater than if the ratio was based on market values
e. greater than; the ratio of debt to equity will be greater than if the ratio was based on market values
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