Question
Titan Mining Corporation has 14.4 million shares of common stock outstanding and 200,000 9 percent semiannual bonds outstanding, par value $1,000 each. The common stock
Titan Mining Corporation has 14.4 million shares of common stock outstanding and 200,000 9 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $30 per share and has a beta of 1.1, and the bonds have 13 years to maturity and sell for 93 percent of par. The market risk premium is 10.5 percent, T-bills are yielding 5.5 percent, and Titan Mining's tax rate is 34 percent. Requirement 1: What is the firms market value capital structure? (Round your answers to 4 decimal places. (e.g., 32.1616)) Market value weight of debt Market value weight of equity Requirement 2: If Titan 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 projects cash flows? (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16)) Weighted average cost of capital %
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