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Organic Produce Corporation has nine million share...

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Organic Produce Corporation has nine million shares of common stock outstanding, 500,000 shares of 6 percent preferred stock outstanding, and 200,000 of 9.4 percent semiannual bonds outstanding, par value $ 1,000 each. The common stock currently sells for $64 per share and has a beta of 1.1, the preferred stock currently sells for $83 per share, and the bonds have 15 years to maturity and sell for 108 percent of par. The market risk premium is 8 percent, T-bills are yielding 5.5 percent, and the firm's tax rate is 34 percent. A- What is the firm's market value capital structure? B. If the firm 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? Please submit the answer in Excel format

 

Paper#8505 | Written in 18-Jul-2015

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