Firm market value capital structure

Assignment Help Finance Basics
Reference no: EM131069007

Titan Mining Corporation has 8.4 million shares of common stock outstanding and 280,000 6 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $32 per share and has a beta of 1.2, and the bonds have 20 years to maturity and sell for 113 percent of par. The market risk premium is 7.2 percent, T-bills are yielding 5 percent, and the company's tax rate is 40 percent.

a. What is the firm's market value capital structure? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)

b. 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? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Reference no: EM131069007

Questions Cloud

Total dollar value after the contract : Enter a contract to deliver your pounds for dollars at the forward exchange rate $1.94/pound. What's the total dollar value after the contract?
Key inputs to the valuation process : Why is it important for financial managers to understand the valuation process? What are the three key inputs to the valuation process?
Nominal annual rate of return : Ingrid Birdman can earn a nominal annual rate of return of 12%, compounded semiannually. If Ingrid made 40 consecutive semiannual deposits of $500 each, with the first deposit being made today, how much will she accumulate at the end of Year 20? R..
Hedge fund manager incentive fee : If the risk-free interest rate is Rf and equals the fund's benchmark, the portfolio's net asset value is P, and the hedge fund manager incentive fee is 30% of profit beyond that, the incentive fee is equivalent to receiving ______ call(s) with exe..
Firm market value capital structure : What is the firm's market value capital structure? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
Healthcare policy news analysis : Find a recent (published within the last year) article about health care policy. The source can be from anywhere - a newspaper, magazine, association newsletter, or professional journal article. The purpose of this exercise is to begin to use po..
Following features of e-commerce technology : Question 1. Network externalities are related to which of the following features of E-commerce technology?
How much china attempted to keep foreign culture : Although whitewashing is probably a large reason Chinese history is not a primary focus in American world history courses, this chapter showed how much China attempted to keep foreign culture out of its borders.
What ethical dangers of using intuition in making decisions : Review the case study of medical workers being required to receive flu shots found in chapter 6 of the textbook. Should medical workers be required to receive flu shots even if doing so violates the worker's personal beliefs?

Reviews

Write a Review

Finance Basics Questions & Answers

  Recording the issuance of common and preferred stock

Kathleen Battle Company was organized on January 1, 2003. It is authorized to issue 10,000 shares of 8 percent, $100 par value preferred stock, and 500,000 shares of no par common stock

  Use of options in stock price speculation

On Oct. 5th, Reem purchased 2500 shares of Mediterranean Co. stocks at €35 per share and 1500 shares of KFD at €28 per share. According to financial analysts' report, in the coming three months Mediterranean and KFD stock prices may decline.

  Computation of emi of the loan

Computation of EMI of the loan and suppose you have decided to start saving money to buy a motorcycle for your loving spouse's

  What amount should jody deduct as an itemized deduction

What amount should Jody deduct as an itemized deduction for state income taxes on her current year tax return'?

  What is the growth rate

ABC is expected to pay a dividend of $1.7 per share at the end of the year. The stock sells for $148 per share, and its required rate of return is 17.9%. The dividend is expected to grow at some constant rate, g, forever. What is the growth rate (..

  Calculate the net present value and internal rate of return

Calculate the net present value and internal rate of return of replacing the existing machine.

  Is manufacturing overhead underapplied or overapplied for

company is a manufacturer that uses job-order costing. on january 1 the beginning of its fiscal year the companys

  What is the net present value of the machine

The machine will be sold for $120,000 after taxes at the end of year five. What is the net present value of the machine if the required rate of return is 13.5%.

  Long term capital for reconstruction of member countries

The World Bank Group was established to help provide long term capital for the reconstruction and development of member countries. Determine which of the following is not one of its financial institutions?

  Calculation of forward price for crude oil

The current spot price of 1 barrel of crude oil is $120, the 1.75-year spot rate is 5% (c.c.), the (continuous flow of) storage costs of crude oil is 1% per year.

  What is compounding and how does it affect the future value

what is compounding and how does it affect the future value of an

  The expected return on jk stock is 1578 percent while the

the expected return on jk stock is 15.78 percent while the expected return on the market is 11.34 percent. the stocks

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd