What is firm market value capital structure

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Titan Corporation has 8.5 million shares of common stock outstanding and 250,000 5.2 percent semiannual bonds outstanding, with a par value of $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.25; the bonds have 15 years to maturity and sell for 114 percent of par. The market risk premium is 7.5 percent, T-bills are yielding 4 percent, and the company's tax rate is 21 percent.

1. What is the firm's market value capital structure?

2. 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?

Reference no: EM133239373

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