What is the firm market value capital structure

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Titan Mining Corporation has 9.3 million shares of common stock outstanding, 370,000 shares of 6 percent preferred stock outstanding, and 195,000 8.1 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $41 per share and has a beta of 1.15, the preferred stock currently sells for $91 per share, and the bonds have 20 years to maturity and sell for 112 percent of par. The market risk premium is 8.1 percent, T-bills are yielding 4 percent, and Titan Mining's tax rate is 40 percent.

a) What is the firm's market value capital structure?
Debt
Preferred stock
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?

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The task pertains to the financial management. The requirement of the questions have been fully illustrated with the proper formulas and linkages in the excel file. The task includes the formulas related to time value of money. The discount rate has been made evidently clear through the each and every integral of the formula. the excel as well as the word file has been appended herewith as per the requirement of the solution.

Reference no: EM13551564

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