What is the firms market value capital structure

Assignment Help Finance Basics
Reference no: EM13263950

Titan Mining Corporation has 8.5 million shares of common stock outstanding, 250,000 shares of 5 percent preferred stock outstanding, and 135,000 7.5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.25, the preferred stock currently sells for $91 per share, and 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 Titan Mining's tax rate is 35 percent.

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

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?

 

Reference no: EM13263950

Questions Cloud

What is the firm pretax cost of debt : Titans, Inc. has 6 percent bonds outstanding that mature in 14 years. The bonds pay interest semiannually and have a face value of $1,000. Currently, the bonds are selling for $993 each. What is the firm's pretax cost of debt?
What is icu pretax cost of debt : ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with nine years to maturity that is quoted at 115 percent of face value. The issue makes semiannual payments and has an embedded cost of 10.2 percent ..
What is the companys cost of equity capital : Halestorm Corporation's common stock has a beta of 1.23. Assume the risk-free rate is 4.8 percent and the expected return on the market is 12.3 percent.
How many decimal numberes can be represented by 10-bits : how many decimal numberes can be represented by 10-bits. what is the largest unsigned decimal number that can be represented by 10-bits.
What is the firms market value capital structure : 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?
How much money will she need to withdraw each year : How much money must she have at age 65 in order to make her planned withdrawals? Round your answer to the nearest penny and do not enter the dollar sign in your answer.
Determine what is the sampling frequency in a dsp system : The sampling frequency in a DSP system is fs=8 kHz. Anti-aliasing filter used in the system is the second-order Butterworth filter with cutoff frequency of fc=3.4 kHz. What is the percentage of aliasing level at the frequency f=2.5 kHz
What is the 2011 cash flow to stockholders : If net fixed assets increased by $22,000 during the year, what was the addition to NWC?
What is the npv of this project : If the tax rate is 35 percent and the discount rate is 7 percent, what is the NPV of this project?

Reviews

Write a Review

Finance Basics Questions & Answers

  Inflation, investment and costs

Steven & Dawn wanted to know how much it would cost to send their daughter Dawson to a private college. They have saved $20,000 to day for the purpose.

  Ratio calculation and analysis

As loan analyst for Utrillo Bank, you have been presented the following data: Each of these corporations has requested a loan of $50,000 for 6 months with no collateral offered.

  Currency swap and spot exchange rate

ABC Corp. entered into a currency swap with its bank, providing that ABC borrows $5 million at 10% and swaps for a 12% yen loan.

  What is the marginal cost of borrowing

A bank offers two 30 year, fixed rate, fully amortizing LPMs: an 85% LTV loan at 6%, and an 80% LTV loan at 5.5%. What is the marginal cost of borrowing if the loan is going to be held for 10 years?

  Find the discount factor

At an interest rate of 12 percent, the six-year discount factor is .507. How many dollars is $.507 worth in six years if invested at 12 percent? If the PV of $139 is $125, find the discount factor?

  Find the present value of both annuities

Find the future value of both annuities at the end of year 10, assuming that Marian can earn and find the present value of both annuities, assuming that Marian can earn

  Three techniques for solving time value problems

Explain how each of the 4 fundamental factors which affect the supply & demand for investment capital,m and hence, interest rates, Explain the 3 techniques for solving time value problems.

  Determine the expected dividend per share

Warr Company just paid a dividend of $1.50 a share. The dividend is expected to grow 7% a year for the next 3 years and then at 5 percent a year thereafter.

  Computing investment to completely fund annuity in 50 years

How much would you have to invest yearly to completely fund annuity in 50 years, again suppose a 6% monthly compounding rate?

  Effect of herfindahl-index guidelines on merger

Determine if the justice department would challenge the merger between two firms in industry with 10 equal-sized firms

  Business assessment-acquisitions

Examine the company's mission and vision statements against the performance of the organization. Then, evaluate how well the company lives out its mission and vision statement. Provide support from the organization's performance in your evaluation..

  Find the pretax economic value

TKK has $1 billion of capital invested in several projects that are expected to create a pretax operating profit of $170 million next year. TKK has an estimated tax cost of capital of 15 percent

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