Raymond Mining Corporation has 8.5 million shares of common stock outstanding, 250,000 shares of 5% preferred stock outstanding, and 135,000 7.5% semiannual bonds outstanding, par value of $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% of par. The market risk premium is 7.5%, T-bills yield 4%, and the company's tax rate is 35%.

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

b. If Raymond Mining is evaluating a new investment project with the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flow?