Titan Mining Corporation has 7.3 million shares of common stock outstanding, 220,000 shares of 4.5 percent preferred stock outstanding, and 120,000 6.5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $46 per share and has a beta of .95, the preferred stock currently sells for $91 per share, and the bonds have 15 years to maturity and sell for 107 percent of par. The market risk premium is 7 percent, T-bills are yielding 3.6 percent, and the companys tax rate is 35 percent. What is the firms market value capital structure? If the company is evaluating a new investment project that has the same risk as the firms typical project, what rate should the firm use to discount the projects cash flows?

J40 c D E F G H I J K L M N O P Q R S T U V W X Y Z AA AB AC AD AE AF AG AH AI AJ AK AL AM AN AO AP AQ AR A S AT A U AV AW AX AY A Z BA Chapter 14 Question 16 how.tre: Each cell shaded is valued at 3 points. Bonds outstanding Settlement date Maturity date Annual coupon rate Coupone per year Bond price (% of par) 120,000 01/01/00 01/01/15 6.50% 7,300,000 Common stock Shares outstanding Beta Share price 0.95 16 Praired'stock owstanding Shares outstanding Coupon rate Share price 220,000 4.50% MAN Market risk premium Risk-free rate Tax rate 7.00% 3.60% 35% Oxow.re: Market value of debt Market value of equity Market value of preferred Market value of firm D/V Weight E/ Weight PIV Weight For projects equally as risky as the firm itself, the WACC should be used as the discount rate. Pretax cost of debt Aftertax cost of debt Cost of cquity Cost of preferred WACC