Question: The capital structure weights used in computing the weighted average cost of capital: are based on the book values of total debt and total equity

  1. The capital structure weights used in computing the weighted average cost of capital:
  1. are based on the book values of total debt and total equity
  2. are based on the market values of the firm's debt and equity securities
  3. are computed using the book value of the long-term debt and the book value of equity
  4. remain constant over time unless the firm issues new securities

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