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Determine the weights for different sources of capital

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Lexi, Lauren and Madeleine wrapped up their discussion with a view of how to calculate the weighted average cost of capital. Lexi says, "One should always use accounting-based future information to value debt and equity to determine the weights for different sources of capital." Madi disagreed, "you should always use the book-value (historical-based) information to value the elements in the sources of capital." Lauren said "no, you should use market-based values of debt equity where you can." Who is correct? Support your answer with examples, as appropriate.

Reference no: EM133060107

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