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Titan Mining Corporation has 9.3 million shares of common stock outstanding, 370,000 shares

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Titan Mining Corporation has 9.3 million shares of common stock outstanding, 370,000 shares of 6 percent preferred stock outstanding, and 195,000 8.1 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $41 per share and has a beta of 1.15, the preferred stock currently sells for $91 per share, and the bonds have 20 years to maturity and sell for 112 percent of par. The market risk premium is 8.1 percent, T-bills are yielding 4 percent, and Titan Mining?s tax rate is 40 percent.;a) What is the firm?s market value capital structure?;Debt;Preferred stock;Equity;b) If Titan Mining 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?

 

Paper#21168 | Written in 18-Jul-2015

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