Example 6:Titan Mining Corporation has 9.3 million shares of common stock outstanding and 260,000, 6.8 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.20, and the bonds have 20 years to maturity and sell for 104 percent of par. The market risk premium is 7 percent, T-bills are yielding 4 percent, and Titan Minings tax rate is 35 percent. The firm also has 1.5M Preferred stocks ($100 par) with 5.67% coupon rate. Each preferred stock is trading at 75.6 on the stock market.

1. What is the firms market value capital structure?
2. Compute Ke, Kd(1-T) and Kp
3. If Titan Mining is evaluating a new investment project that has the same risk as the firms typical project, what rate should the firm use to discount the projects cash flows?