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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 equity is three times greater than the market value of its preferred stock. The company has a weighted average cost of capital of 11.3 percent. The companys cost of equity is 15 percent, its cost of preferred is 9 percent, and its pre-tax cost of debt is 6 percent. The corporate tax rate is 21 percent. What are the capital structure weights?
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