The firm use to discount the project cash flows

Assignment Help Financial Management

Reference no: EM131613813

Titan Mining Corporation has 8.7 million shares of common stock outstanding and 310,000 6 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $35 per share and has a beta of 1.35, and the bonds have 20 years to maturity and sell for 116 percent of par. The market risk premium is 7.5 percent, T-bills are yielding 5 percent, and Titan Mining’s tax rate is 30 percent. a. What is the firm's market value capital structure? (Do not round intermediate calculations and round your final answers to 4 decimal places (e.g., 32.1616).)

Market value weight

Debt

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

Discount rate %

Reference no: EM131613813

Questions Cloud

What is the expected rate of return for this stock : what is the expected rate of return for this stock under the discounted cash flow model?

Find the velocity of a car : Which is traveling faster, a car whose velocity vector is 21i? + 35j?, or a car whose velocity vector is 40i?, assuming that the units are the same.

Record the bond issue on january : Record the bond issue on January 1, 2018, and the first two semiannual interest payments on June 30, 2018, and December 31, 2018

What are the similarities to the us healthcare system : What is the main focus of the policy standard in this (chosen) country? What are the similarities to the U.S. healthcare system?

The firm use to discount the project cash flows : what rate should the firm use to discount the project's cash flows?

What aspects of the communication process can you use : Explain how you would respond when an individual's values conflict with yours.How would you communicate with that individual or their significant others ?

Analyze adequacy checklist for organizing intrinsic value : Analyze the proposal adequacy checklist for organizing a proposal, and summarize the intrinsic value of two of the suggestions on the checklist.

Label the remaining sides of hexagon : Two adjacent sides of a regular hexagon are given as the vectors u? and v? in Figure. Label the remaining sides in terms of u? and v?.

Most likely to be unsystematic risk : Which one of the following is most likely to be unsystematic risk?

User Account

All Pages