Overview · What & why
A decision, before a calculation.
A capital stack describes the claims financing an asset. Senior debt typically has priority over equity, while equity absorbs residual gains and losses. Within equity, investors and sponsors may contribute different amounts and receive different economic or governance rights. Those terms belong in the agreement, not just in a model.
A concrete example
If Riverton costs $13.5M and borrows 65% of cost in simple mode, debt is $8.775M and initial equity is $4.725M. A 90/10 equity funding split would contribute $4.2525M and $472,500, but distributions need not follow that split.
What to remember
Capital structure includes obligations and control, as well as percentages.
Before using this in a project: Sources and uses, contribution schedule, guarantees, governance terms and distribution agreement.