What is the firm market value capital structure

Assignment Help Finance Basics
Reference no: EM132347890

Titan Mining Corporation has 9.5 million shares of common stock outstanding and 390,000 4.9 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $43 per share and has a beta of 1.15; the bonds have 15 years to maturity and sell for 114 percent of par. The market risk premium is 8.3 percent, T-bills are yielding 4 percent, and the company's tax rate is 25 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., .3216.)

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: EM132347890

Questions Cloud

Identify a current or recent health policy issue : Identify a current or recent health policy issue facing a government, or a particular level of government, in a country of your choice
What is the break-even volume : What would the total cost, total sales and profit (or loss) be for a weekly volume of 100,000 bars? What is the break-even volume?
What is the company wacc : Suppose the company's stock has a beta of 1.4. The risk-free rate is 3.4 percent and the market risk premium is 7.3 percent.
Describe the key functions of a modern operating system : BCS HIGHER EDUCATION QUALIFICATIONS- BCS Level 4 Certificate in IT- COMPUTER & NETWORK TECHNOLOGY -Describe the key functions of a modern operating system.
What is the 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., .3216.)
Acquisition of a chain of cemeteries : Random, Inc is considering the acquisition of a chain of cemeteries for $440 Million, Since the primary asset of this business is real estate
Write an audit program for internal control of cash : Write an audit program for internal control of cash in Word or Excel. The following components must be included: Information and communication.
Explain why the fisher equation holds : Explain why the Fisher Equation holds; that is, explain why the expectation of higher inflation leads to a higher nominal interest rate.
Analyze the effect of full-cost transfer pricing method : Analyze the effect of both full-cost and variable-cost transfer pricing methods on Phipps' cash flows using a spreadsheet program such as Excel.

Reviews

Write a Review

Finance Basics Questions & Answers

  Tadewinds corp has revenues of 9651220 costs of 6080412

tradewinds corp. has revenues of 9651220 costs of 6080412 interest payment of 511233 and a tax rate of 34 percent. it

  Explain the concept of merchant banking

Explain the concept of merchant banking. Give a small introduction on book building and write about the methods and guidelines for book building

  Demonstrates the use of three long-term funding sources

Provide a sport or sport related business scenario that demonstrates the use of three long-term funding sources. How would you prioritize the use of sources?

  What is the relationship between the firm

What is the relationship between the firm's target capital structure and the weighted average cost of capital (WACC)?

  Show the effect on the frontier of varying the correlation

Consider the two stocks below. Graph the frontier of combinations of the two stocks. Show the effect on the frontier of varying the correlation from - 1 to + 1.

  Explain the concept of limited liability

Explain the concept of "limited liability" in the context of a corporation. Is limited liability an advantage or disadvantage of the corporate form of business organization? Why?

  The major differences between a fixed and a flexible budget

Explain the major differences between a fixed and a flexible budget.

  What is the current share price

Yang Corp. is growing quickly. Dividends are expected to grow at a rate of 32 percent for the next three years, with the growth rate falling off to a constant 6.7 percent thereafter.

  Calculate the charge necessary to recover for cost

Calculate the charge necessary to recover your cost.

  Stated interest rate and an effective interest rate

In general, what is the relationship between a stated interest rate and an effective interest rate? Which is more relevant for financial decisions?

  Bid and ask cross rates-outright cross rates

As a foreign exchange trader at Sumitomo Bank, one of your customers would like the yen quote on Australian dollars. Current market rates are:

  Compute the amount needed to fund

Upon completion of her introductory finance course Marla lee was so pleased with the value of useful and interesting knowledge she gained that she convinced her parents,

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