Titan Mining Corporation has 7.5 million shares of common stock outstanding, 250,000 shares of 4.2 percent...

Titan Mining Corporation has 7.5 million shares of common stock outstanding, 250,000 shares of 4.2 percent preferred stock outstanding, and 140,000 bonds with a semiannual coupon of 5.1 percent outstanding, par value $1000 each. The common stock currently sells for $51 per share and has a beta of 1.15, the preferred stock currently sells for $103 per share, and the bonds have 15 years to maturity and sells for 107 percent of par. The market risk premium is 7.5 percent, T-bills are yielding 2.4 percent, and the company's tax rate is 22 percent.

a. what is the firm's market value capital structure?

b. If the company 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?

Expert Solution

(a) Firm's market value capital structure : -

(b) Discount rate : -

jeff jeffy answered 4 months ago

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Titan Mining Corporation has 7.5 million shares of common stock outstanding, 250,000 shares of 4.2 percent...

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