Ford Corporation has 9 million shares of common stock outstanding, 500,000 shares of 7 percent preferred stock outstanding, and 120,000 annual bonds outstanding, face value $1,000 each with 8.5 percent annual coupon payments. The common stock currently sells for $34 per share and has a beta of 1.20, the preferred stock currently sells for $83 per share, and the bonds have 15 years to maturity and sell for 88.6 percent of face value (based on the current market price, its YTM is 10%). The market risk premium is 10 percent, Treasury bills are yielding 5 percent, and Ford Corporation's tax rate is 35 percent.

a. What is the firm's market value capital structure?

b. If Ford Corporation is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows?