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

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Hankins Corporation has 8.4 million shares of common stockoutstanding, 590,000 shares of 7.4 percent preferred stockoutstanding, and 184,000 of 8.6 percent semiannual bondsoutstanding, par value $1,000 each. The common stock currentlysells for $64.90 per share and has a beta of 1.29, the preferredstock currently sells for $107.10 per share, and the bonds have 13years to maturity and sell for 91.5 percent of par. The market riskpremium is 7 percent, T-bills are yielding 5.7 percent, and thefirm’s tax rate is 35 percent.

a. What is the firm's market value capitalstructure? (Do not round intermediate calculations andround your answers to 4 decimal places, e.g.,32.1616.)

Market value weight of debt
Market value weight of preferred stock
Market value weight of equity

b. If the firm is evaluating a new investmentproject that has the same risk as the firm’s typical project, whatrate should the firm use to discount the project’s cash flows?(Do not round intermediate calculations and enter youranswer as a percent rounded to 2 decimal places, e.g.,32.16.)

Weighted average cost of capital            %

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Hankins Corporation has 8.4 million shares of common stockoutstanding, 590,000 shares of 7.4 percent preferred stockoutstanding, and 184,000 of 8.6 percent semiannual bondsoutstanding, par value $1,000 each. The common stock currentlysells for $64.90 per share and has a beta of 1.29, the preferredstock currently sells for $107.10 per share, and the bonds have 13years to maturity and sell for 91.5 percent of par. The market riskpremium is 7 percent, T-bills are yielding 5.7 percent, and thefirm’s tax rate is 35 percent.a. What is the firm's market value capitalstructure? (Do not round intermediate calculations andround your answers to 4 decimal places, e.g.,32.1616.) Market value weight of debtMarket value weight of preferred stockMarket value weight of equityb. If the firm is evaluating a new investmentproject that has the same risk as the firm’s typical project, whatrate should the firm use to discount the project’s cash flows?(Do not round intermediate calculations and enter youranswer as a percent rounded to 2 decimal places, e.g.,32.16.) Weighted average cost of capital %


Market value weight of debt
Market value weight of preferred stock
Market value weight of equity