Raymond Mining Corporation has 8.3 million shares of common stock outstanding. 270,000 shares of 5% $100 par value preferred stock outstanding, and 139.000 7.50% semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $31 per share and has a beta of 115, the preferred stock currently sells for $93 per share, and the bonds have 15 years to maturity and sell for 112% of par. The market risk premium is 71%, T-bills are yielding 4%, and Raymond Mining's tax rate is 30%.

a. What is the firm's market value capital structure? (Enter your answers in whole dollars.)

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Market value

100%

01:16:59

Debt

Equity

S

Preferred stock

b. If Raymond Mining 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? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 3 decimal places.)

Discount rate