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Explain the link between the Weighted Average Cost of Capital (WACC) and leverage. If you use market values to calculate the WACC and your stock

Explain the link between the Weighted Average Cost of Capital (WACC) and leverage. If you use market values to calculate the WACC and your stock price or bond prices become erratic, elaborate how this will influence your capital structure and, as a result, the firms investment choice.

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