22 Jul WHAT IS THE FIRMS MARKET VALUE CAPITAL STRUCTURE?
Titan Mining Corporation has 8.9 million shares of common stock outstanding and 330000 5 percent se Show more Titan Mining Corporation has 8.9 million shares of common stock outstanding and 330000 5 percent semiannual bonds outstanding par value $1000 each. The common stock currently sells for $37 per share and has a beta of 1.45 and the bonds have 15 years to maturity and sell for 118 percent of par. The market risk premium is 7.7 percent T-bills are yielding 4 percent and Titan Minings tax rate is 40 percent. a. What is the firms market value capital structure? (Do not round intermediate calculations and round your final answers to 4 decimal places. b. If Titan Mining 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? Show less
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