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MCS,MBA(IT), Pursuing PHD
Devry University
Sep-2004 - Aug-2010
Assistant Financial Analyst
NatSteel Holdings Pte Ltd
Aug-2007 - Jul-2017
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 $10,650Â Â Â Â Â Â $10,000Â Â Â Â Â Â Â Â Â Â 10.6%
Common Equity $65,740Â Â Â Â Â $32,000Â Â Â Â Â Â Â Â Â Â Â 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?
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