Finding the WACC: Titan Mining Corporation has 9m shares of common stock outstanding

[seql19]

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Titan Mining Corporation has 9 million shares of common stock outstanding, 250,000 shares of 6 percent preferred stock outstanding, and 105,000 7.5 percent semiannual bonds outstanding, par value $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 93 percent of par. The market risk premium is 8.5 percent, T-bills are yielding 5 percent, and Titan Mining’s tax rate is 35 percent.
a.What is the fi rm’s market value capital structure?
b.If Titan Mining is evaluating a new investment project that has the same risk as the fi rm’s typical project, what rate should the fi rm use to discount the project’s cash fl ows?
ros46128

 

[stapel]

Can you help me for this question?

Titan Mining Corporation has 9 million shares of common stock outstanding, 250,000 shares of 6 percent preferred stock outstanding, and 105,000 7.5 percent semiannual bonds outstanding, par value $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 93 percent of par. The market risk premium is 8.5 percent, T-bills are yielding 5 percent, and Titan Mining’s tax rate is 35 percent.
a.What is the fi rm’s market value capital structure?
b.If Titan Mining is evaluating a new investment project that has the same risk as the fi rm’s typical project, what rate should the fi rm use to discount the project’s cash fl ows?
ros46128

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