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Calculate the firms capital structures

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A relatively young firm has capital components valued at book and market and market component costs as follows. No new securities have been issued since the firm was originally capitalized.

                                        Values

Component        Market       Book             Market Cost

Debt                    $42,830       $40,000           8.5%

Preferred Stock $10,650       $10,000           10.6%

Common Equity $65,740      $32,000            25.3%

Calculate the firm's capital structures and WACCs based on both book and market values, and compare the two. What appears to have happened to interest rates since the company was started? Does the firm seem to be successful?

Reference no: EM131828304

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