Titan Mining Corporation has 9.6 million shares of common stock outstanding, 400,000 shares of 6 percent preferred stock outstanding, and 210,000 8.4 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $44 per share and has a beta of 1.30, the preferred stock currently sells for $94 per share, and the bonds have 20 years to maturity and sell for 115 percent of par. The market risk premium is 8.4 percent, T-bills are yielding 4 percent, and the companys tax rate is 40 percent.

a. What is the firms market value capital structure?

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?

Discount Rate (%):