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Business, 30.06.2020 17:01 hannahkharel2

Titan Mining Corp. has 7.3 million shares of common stock outstanding, 220,000 shares of 4.5 percent preferred stock outstanding and 120,000 6.2 percent semiannual bonds outstanding, par value of $1,000 each. The common stock currently sells for $46 per share and has a beta of .95, the preferred stock currently sells for $91 per share, and the bonds have 15-years to maturity and sell for 107 percent of par. The market risk premium is 7 percent, T-bills are yielding 3.6 percent, and the company’s tax rate is 35 percent. 1• What is the firm’s market value capital structure?
2• 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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