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Titan Mining Corporation has 6.3 million shares of common stock outstanding, 220,000 shares of 3.6 percent preferred stock outstanding, and 105,000 bonds with a
Titan Mining Corporation has 6.3 million shares of common stock outstanding, 220,000 shares of 3.6 percent preferred stock outstanding, and 105,000 bonds with a semiannual coupon rate of 5.3 percent outstanding, par value $1,000 each. The common stock currently sells for $73 per share and has a beta of 1.15, the preferred stock has a par value of $100 and currently sells for $83 per share, and the bonds have 17 years to maturity and sell for 107 percent of par. The market risk premium is 7.1 percent, T-bills yield 3.1 percent, and the company's tax rate is 23 percent. a. What is the firm's market value weights of capital structure? MVD MVE MVP Total Market Value (V) D/V E/V P/V b. What is the cost of equity? c. What is the cost of debt? Please illustrate the parameter used in your calculator. FV= N= PMT= PV= I/Y= Cost of debt (YTM)= d. What is the cost of preferred stock? e. If the company 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?
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