Titan Mining Corporation has 9.4 million shares of common stock outstanding and 380,000 4.8 percent semiannual...

Titan Mining Corporation has 9.4 million shares of common stock outstanding and 380,000 4.8 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $42 per share and has a beta of 1.1; the bonds have 10 years to maturity and sell for 113 percent of par. The market risk premium is 8.2 percent, T-bills are yielding 3 percent, and the company’s tax rate is 24 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., .3216.)
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 and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Expert Solution

jeff jeffy answered 2 years ago

Titan Mining Corporation has 9.4 million shares of common stock outstanding and 380,000 bonds that pay...

Titan Mining Corporation has 9.4 million shares of common stock outstanding and 380,000 bonds that pay a coupon rate of 4.8 percent APR, make semiannual payments and have a par value of $1,000 each. The common stock currently sells for $42 per share and has a beta of 1.1; the bonds have 10 years to maturity and sell for 113 percent of par. The market risk premium is 8.2 percent, T-bills are yielding 3 percent, and the company’s tax rate...

Raymond Mining Corporation has 9.4 million shares of common stock outstanding, 380,000 shares of 4% $100...

Raymond Mining Corporation has 9.4 million shares of common stock outstanding, 380,000 shares of 4% $100 par value preferred stock outstanding, and 161,000 7.50% semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $42 per share and has a beta of 1.20, the preferred stock currently sells for $91 per share, and the bonds have 10 years to maturity and sell for 113% of par. The market risk premium is 8.2%, T-bills are yielding 3%, and...

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Titan Mining Corporation has 9.6 million shares of common stock outstanding and 400,000 6 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $44 per share and has a beta of 1.3, 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 company’s tax rate is 40 percent. a. What is the firm's market value...

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Titan Mining Corporation has 8.6 million shares of common stock outstanding and 300,000 5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.3, and the bonds have 15 years to maturity and sell for 115 percent of par. The market risk premium is 7.4 percent, T-bills are yielding 3 percent, and the company’s tax rate is 40 percent. a. What is the firm's market value...

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Titan Mining Corporation has 9.1 million shares of common stock outstanding and 350,000 4.7 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $39 per share and has a beta of 1.25; the bonds have 10 years to maturity and sell for 110 percent of par. The market risk premium is 7.9 percent, T-bills are yielding 5 percent, and the company’s tax rate is 21 percent. a. What is the firm's market value capital structure?...

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