Question
Titan Mining Corporation has 7.8 million shares of common stock outstanding, 290,000 shares of 4.3 percent preferred stock outstanding, and 175,000 5.9 percent semiannual bonds
Titan Mining Corporation has 7.8 million shares of common stock outstanding, 290,000 shares of 4.3 percent preferred stock outstanding, and 175,000 5.9 percent semiannual bonds outstanding, par value $2,000 each. The common stock currently sells for $59 per share and has a beta of 1.05, the preferred stock currently sells for $100 per share, and the bonds have 16 years to maturity and sell for 103 percent of par. The market risk premium is 6.8 percent, T-bills are yielding 3.5 percent, and the companys tax rate is 22 percent.
What is the firms market value capital structure?
A) Market value weight of
Debt ?
Preferred stock ?
Equity ?
B) 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?
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