Titan Mining Corporation has 6.1 million shares of common stock outstanding, 210,000 shares of 3.4 percent...

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Finance

Titan Mining Corporation has 6.1 million shares of common stockoutstanding, 210,000 shares of 3.4 percent preferred stockoutstanding, and 95,000 bonds with a semiannual coupon rate of 5.1percent outstanding, par value $1,000 each. The common stockcurrently sells for $75 per share and has a beta of 1.05, thepreferred stock has a par value of $100 and currently sells for $81per share, and the bonds have 15 years to maturity and sell for 105percent of par. The market risk premium is 6.8 percent, T-bills areyielding 2.8 percent, and the company’s tax rate is 21 percent. a.What is the firm’s market value capital structure? (Do not roundintermediate calculations and round your answers to 4 decimalplaces, e.g., .1616.) b. If the company is evaluating a newinvestment project that has the same risk as the firm’s typicalproject, what rate should the firm use to discount the project’scash flows? (

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3.9 Ratings (750 Votes)

1 Market value of common stock 6100000 75 457500000 Market value of preferred stock 210000 81 17010000 Market value of bonds 95000 105 1000 99750000 Total market value 457500000 See Answer

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