I saw the answers for the capital structure with the power systems company Raging Volts and wanted to know why the market value of the company was used to calculate the breakpoints of equity and debt. My understanding of the breakpoint formula is BP $($equity$)=\frac{\text{A}\text{m}\text{o}\text{u}\text{n}\text{t}of\text{f}\text{u}\text{n}\text{d}\text{s}\text{a}\text{v}\text{a}\text{i}\text{l}\text{a}\text{b}\text{l}\text{e}\text{f}\text{r}\text{o}\text{m}\text{f}\text{i}\text{n}\text{a}\text{n}\text{c}\text{i}\text{n}\text{g}\text{s}\text{o}\text{u}\text{r}\text{c}\text{e}(at\text{g}\text{i}\text{v}\text{e}\text{n}cost)}{\text{c}\text{a}\text{p}\text{i}\text{t}\text{a}\text{l}\text{s}\text{t}\text{r}\text{u}\text{c}\text{t}\text{u}\text{r}\text{e}\text{w}\text{e}\text{i}\text{g}\text{h}\text{t}of\text{t}\text{h}\text{e}\text{f}\text{i}\text{n}\text{a}\text{n}\text{c}\text{i}\text{n}\text{g}\text{s}\text{o}\text{u}\text{r}\text{c}\text{e}}.$

How and why is the market value of the company used to calculate the breakpoints?

For context the market value was given at $2000000,$ the capital structure is $70\%$ equity at a $12\mathrm{.}35\%$ cost and $30\%$ debt at a $16\%$ cost$.$