What is the firm’s market value capital structure

Assignment Help Financial Management

Reference no: EM131074628

Titan Mining Corporation has 8.6 million shares of common stock outstanding, 300,000 shares of 5 percent preferred stock outstanding, and 160,000 7.4 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.30, the preferred stock currently sells for $84 per share, and the bonds have 15 years to maturity and sell for 115 percent of par. The market risk premium is 7.4 percent, T-bills are yielding 3 percent, and the company’s tax rate is 40 percent. a. What is the firm’s market value capital structure? (Do not round intermediate calculations. Round your answers to 4 decimal places, e.g., 32.1616.) Market value weight Debt Preferred stock Equity -------------------------------------------------------------------------------- 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. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Discount rate

Reference no: EM131074628

Questions Cloud

Expected to pay for itself from the cost savings : Company Z is considering purchasing a robotic welding machine which is estimated to reduce expenses by $54,000 per year. The machine will have no effect on revenues but is expected to pay for itself from the cost savings. Fill in the following inform..

What is the total market value of this firm : The current stock price for a company is $34 per share, and there are 7 million shares outstanding. This firm also has 170,000 bonds outstanding, which pay interest semiannually. If these bonds have a coupon interest rate of 9%, 19 years to maturity,..

Decided to add leverage to their financial operations : Martin and Sons (M and S) currently is an all equity firm with 48,000 shares of stock outstanding at a market price of $25 a share. The company's earnings before interest and taxes are $82,000. M and S has decided to add leverage to their financial o..

What spread position would you use to effect an arbitrage : Suppose call and put prices are given by: Strike 75 80 Call premium 7 8 Put premium 4 10. What no-arbitrage condition is violated by the call premiums? What spread position would you use to effect an arbitrage?

What is the firm’s market value capital structure : Titan Mining Corporation has 8.6 million shares of common stock outstanding, 300,000 shares of 5 percent preferred stock outstanding, and 160,000 7.4 percent semiannual bonds outstanding, par value $1,000 each. What is the firm’s market value capital..

What bid price should you submit on the contract : Consider a project to supply 100 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $1,900,000 five years ago; if the land were sold today, it would net you $2,100,0..

Dequate compensation for this investment : You are considering the purchase of Crown Bakery, Inc. common stock that just paid a dividend od $19.59 per share. You expect the dividend to grow at a rate of 1.04 percent per year, indefinitely. You estimate the rate of return od 12.18%, will be ad..

Average-risk investment in mineral water spring project : The Rodriguez Company is considering an average-risk investment in a mineral water spring project that has a cost of $155,000. The project will produce 950 cases of mineral water per year indefinitely. Assume that cash flows consist only of after-tax..

How much loss would company recognize on income statement : Randy's tireland makes a product that sells for $63 per unit and has $47 per unit in variable costs. Annual fixed costs are $24,000. If Rambles sells 10 units less than breakeven, how much loss would the company recognize on its income statement?

User Account

All Pages