Titan Mining Corporation has 9.9 million shares of common stock outstanding, 430,000 shares of 6.1...
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Finance
Titan Mining Corporation has 9.9 million shares of common stock outstanding, 430,000 shares of 6.1 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $47 per share and has a beta of 1.15; the bonds have 20 years to maturity and sell for 118 percent of par. The market risk premium is 8.7 percent, T-bills are yielding 5 percent, and the companys tax rate is 24 percent.
a. What is the firms 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 firms typical project, what rate should the firm use to discount the projects cash flows?
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