What is the firm market value capital structure

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Question - Titan Mining Corporation has 9.8 million shares of common stock outstanding and 420,000 5.2 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $46 per share and has a beta of 1.3; the bonds have 15 years to maturity and sell for 117 percent of par. The market risk premium is 8.6 percent, T-bills are yielding 4 percent, and the company's tax rate is 23 percent.

Required -

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

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?

Reference no: EM133024248

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