2 Titan Mining Corporation has 8.5 million shares of common stock outstanding, 250,000 shares of 5 percent preferred stock outstanding, and 135,000 7.5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.25, the preferred stock currently sells for $91 per share, and the bonds have 15 years to maturity and sell for 114 percent of par. The market risk premium is 7.5 percent, T-bills are yielding 4 percent, and Titan Mining's tax rate is 35 percent. m009 Debt Bonds outstanding Settlement date Maturity date Annual coupon rate Coupons per year Bond price (% of par) Par value ($) 135,000 01/01/00 01/01/15 -7.50% 2 114 1,000 11 12 13 14 15 16 17 18 19 Common stock Shares outstanding Beta Share price 8,500,000 1.25 34 Preferred stock outstanding Sheet1 Preferred stock outstanding Shares outstanding Coupon rate Share price Par value ($) 250,000 5.00% 91 100 Market Market risk premium Risk-free rate Tax rate 7.50% 4.00% 35% Complete the following analysis. Do not hard code values in your calculations. What is the firm's market value capital structure? 6 Market value of debt $ Market value of equity $ Market value of preferred $ Market value of firm $ 153,900,000 289,000,000 22,750,000 465,650,000 7 8 59 90 41 42 Weight of debt Weight of equity Weight of preferred Complete the following analysis. Do not hard code values in your calculations. What is the firm's market value capital structure? Market value of debt Market value of equity Market value of preferred Market value of firm $ $ $ $ 153,900,000 289,000,000 22,750,000 465,650,000 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 Weight of debt Weight of equity Weight of preferred What is the firm's weighted average cost of capital, or WACC? Pretax cost of debt Aftertax cost of debt Cost of equity Cost of preferred WACC 54