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Titan Mining Corporation has 9 million shares of common stock outstanding, 250,000 share of 6 percent preferred stock outstanding, and 105,000 7.5 percent semiannual bonds
Titan Mining Corporation has 9 million shares of common stock outstanding, 250,000 share of 6 percent preferred stock outstanding, and 105,000 7.5 percent semiannual bonds outstanding, par value $1000 each. The common stock currently sells for $34 per share and has a beta of 1.25, the preferred stock currently sells for $91 per share, and the bonds have 15 years to maturity and sell for 93 percent of par. The market risk premium is 8.5 percent, T-bills are yielding 5 percent and Titan Mining's tax rate is 35 percent. A) What is the firm's market value structure? B) 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
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