A relatively young firm has capital components valued at book and market and market componentcosts 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, andcompare the two. What appears to have happened to interest rates since the company was started?Does the firm seem to be successful?