Hankins Corporation has 7.9 million shares of common stock outstanding, 295,000 shares of 4.2 percent preferred...

Hankins Corporation has 7.9 million shares of common stock outstanding, 295,000 shares of 4.2 percent preferred stock outstanding, par value of $100; and 180,000 bonds with a semiannual coupon rate of 5.7 percent outstanding, par value $2,000 each. The common stock currently sells for $58 per share and has a beta of 1.10, the preferred stock has a par value of $100 and currently sells for $98 per share, and the bonds have 17 years to maturity and sell for 106 percent of par. The market risk premium is 6.7 percent, T-bills are yielding 3.4 percent, and the company’s tax rate is 23 percent.

a.	What is the firm’s market value capital structure? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)
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? (Do not round intermediate calculations enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)


a.	Debt
	Preferred stock
	Equity
b.	Discount rate	%

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

jeff jeffy answered 4 months ago

itan Mining Corporation has 7.9 million shares of common stock outstanding, 295,000 shares of 4.2 percent...

itan Mining Corporation has 7.9 million shares of common stock outstanding, 295,000 shares of 4.2 percent preferred stock outstanding, and 180,000 bonds with a semiannual coupon rate of 5.7 percent outstanding, par value $2,000 each. The common stock currently sells for $58 per share and has a beta of 1.10, the preferred stock has a par value of $100 and currently sells for $98 per share, and the bonds have 17 years to maturity and sell for 106 percent of...

Titan Mining Corporation has 7.9 million shares of common stock outstanding, 295,000 shares of 4.2 percent...

Titan Mining Corporation has 7.9 million shares of common stock outstanding, 295,000 shares of 4.2 percent preferred stock outstanding, and 180,000 bonds with a semiannual coupon rate of 5.7 percent outstanding, par value $2,000 each. The common stock currently sells for $58 per share and has a beta of 1.10, the preferred stock has a par value of $100 and currently sells for $98 per share, and the bonds have 17 years to maturity and sell for 106 percent of...

Hankins Corporation has 5.5 million shares of common stock outstanding, 302,000 shares of 4.2 percent preferred...

Hankins Corporation has 5.5 million shares of common stock outstanding, 302,000 shares of 4.2 percent preferred stock outstanding, par value of $100, and 155,000 5.5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $72.90 per share and has a beta of 1.11, the preferred stock currently sells for $104.20 per share, and the bonds have 20 years to maturity and sell for 103.6 percent of par. The market risk premium is 6.7 percent, T-bills...

Hankins Corporation has 9.4 million shares of common stock outstanding, 690,000 shares of 7.4 percent preferred...

Hankins Corporation has 9.4 million shares of common stock outstanding, 690,000 shares of 7.4 percent preferred stock outstanding, and 194,000 of 8.6 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $65.90 per share and has a beta of 1.39, the preferred stock has a par value of $100 and currently sells for $106.10 per share, and the bonds have 13 years to maturity and sell for 86.5 percent of par. The market risk premium...

Hankins Corporation has 7.6 million shares of common stock outstanding, 510,000 shares of 7.1 percent preferred...

Hankins Corporation has 7.6 million shares of common stock outstanding, 510,000 shares of 7.1 percent preferred stock outstanding, and 176,000 of 8.3 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $64.10 per share and has a beta of 1.21, the preferred stock currently sells for $107.90 per share, and the bonds have 16 years to maturity and sell for 95.5 percent of par. The market risk premium is 6.85 percent, T-bills are yielding 5.55...

Hankins Corporation has 5.1 million shares of common stock outstanding, 294,000 shares of 5.2 percent preferred...

Hankins Corporation has 5.1 million shares of common stock outstanding, 294,000 shares of 5.2 percent preferred stock outstanding, par value of $100, and 135,000 5.5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $72.30 per share and has a beta of 1.07, the preferred stock currently sells for $103.40 per share, and the bonds have 22 years to maturity and sell for 102.8 percent of par. The market risk premium is 6.3 percent, T-bills...

Hankins Corporation has 6.1 million shares of common stock outstanding, 314,000 shares of 4.5 percent preferred...

Hankins Corporation has 6.1 million shares of common stock outstanding, 314,000 shares of 4.5 percent preferred stock outstanding, par value of $100, and 67,000 5.5 percent semiannual bonds outstanding, par value $2,000 each. The common stock currently sells for $73.80 per share and has a beta of 1.17, the preferred stock currently sells for $105.40 per share, and the bonds have 20 years to maturity and sell for 95.5 percent of par. The market risk premium is 6.5 percent, T-bills...

Hankins Corporation has 9.3 million shares of common stock outstanding, 680,000 shares of 7.3 percent preferred...

Hankins Corporation has 9.3 million shares of common stock outstanding, 680,000 shares of 7.3 percent preferred stock outstanding, and 193,000 of 8.5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $65.80 per share and has a beta of 1.38, the preferred stock currently sells for $106.20 per share, and the bonds have 14 years to maturity and sell for 87 percent of par. The market risk premium is 6.95 percent, T-bills are yielding 5.65...

Hankins Corporation has 6.8 million shares of common stock outstanding, 328,000 shares of 4.85 percent preferred...

Hankins Corporation has 6.8 million shares of common stock outstanding, 328,000 shares of 4.85 percent preferred stock outstanding, par value of $100, and 81,000 5.2 percent semiannual bonds outstanding, par value $2,000 each. The common stock currently sells for $74.85 per share and has a beta of 1.10, the preferred stock currently sells for $102.40 per share, and the bonds have 21 years to maturity and sell for 96.9 percent of par. The market risk premium is 7.2 percent, T-bills...

Hankins Corporation has 8.4 million shares of common stock outstanding, 590,000 shares of 7.4 percent preferred...

Hankins Corporation has 8.4 million shares of common stock outstanding, 590,000 shares of 7.4 percent preferred stock outstanding, and 184,000 of 8.6 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $64.90 per share and has a beta of 1.29, the preferred stock currently sells for $107.10 per share, and the bonds have 13 years to maturity and sell for 91.5 percent of par. The market risk premium is 7 percent, T-bills are yielding 5.7...

Question