Rocket Medical, Inc. has 9.3 million shares of common stock outstanding and 260,000 bond outstanding with 6.8 percent semiannual coupons and $1,000 par value. 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 3.5 percent, and Rocket Medical, Inc. tax rate is 35%.

i. What is the firms market value capital structure? ii. If Rocket Medical, Inc. is evaluating a new investment project that has the same risk as the firms typical project and use the same debt/equity ratio as the companys for financing the project, what rate should the firm use to discount the projects cash flows?

PLEASE SHOW ALL WORK