Titan Corporation has million shares of common stock outstanding and
percent semiannual bonds outstanding, with a par value of $ each. The common
stock currently sells for $ per share and has a beta of ; the bonds have years to
maturity and sell for percent of par. The market risk premium is percent, Tbills are
yielding percent, and the company's tax rate is percent.
a What is the firm's market value capital structure? Do not round intermediate
calculations and round your answers to decimal places, eg
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 decimal places, eg
