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The Rainforest, Inc. uses a mixture of common stock, preferred stock, and debt to finance its operations. In its capital structure, the market value of
The Rainforest, Inc. uses a mixture of common stock, preferred stock, and debt to finance its operations. In its capital structure, the market value of the companys debt is two times greater than the market value of its preferred stock. The company has a weighted average cost of capital of 7.1 percent. The companys cost of equity is 10.3 percent, its cost of preferred is 8.5 percent, and its pre-tax cost of debt is 5.2 percent. The corporate tax rate is 21 percent. What are the capital structure weights?
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