Titan Mining Corporation has 7.3 million shares of common stock outstanding and 78,000 8.6% quarterly bonds outstanding, par value of $ 1,000 each. The common stock currently sells for $ 75 per share, and has a beta of 0.40. The bonds have 15 years remaining till maturity, and sell for 110% of par. The market risk premium is 8%, T-bills are yielding 3%, and Titan's tax rate is 40%. Currently, the firm also has 100,000 7 % preferred stock selling for $ 110 per share. Floatation costs are 2.5% for both preferred and common stock. Assume that the firm has to raise new common and preferred equity to finance new ventures.

1. What is the firm'smarket valuecapital structure?

1. 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 project's cash flows? Calculate this rate.