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Business, 16.04.2020 21:52 epicriderexe

Titan Mining Corporation has 8.5 million shares of common stock outstanding, 250,000 shares of 5% preferred stock outstanding, and 135,000 7.5% semi-annual bonds outstanding, with a par value of $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.25, the preferred stock currently sells for $91 per share, and the bonds have 15 years to maturity and sell for 114% of par. The market return is 11.5%, and T bills are yielding 4%. Titan Mining’s tax rate is 35%. a. What is the firm’s market value capital structure? 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?

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Titan Mining Corporation has 8.5 million shares of common stock outstanding, 250,000 shares of 5% pr...
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