Raymond Mining Corporation has 10.0 million shares of common stock outstanding, 440, 000 shares of 4% $100 par value preferred stock outstanding, and 173,000 7.50% semiannual bonds outstanding, par value of $1000 each. The common stock currently sells for $48 per share nd has a beta of 1.50, the preffered stock urrently sells for $97 per share, and the bonds have 10 years to maturity and sell for 115% par. The market risk premium is 8.8%, T-bills are yielding 5%, and Raymond Mining's tax rate is 40%. What is the firm's market value capital structure? Debt? Equity? Preferred Stock? If Raymond 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?

Raymond Mining Corporation has 10.0 million shares of common stock outstanding, 440, 000 shares of 4% $100 par value preferred stock outstanding, and 173,000 7.50% semiannual bonds outstanding, par value of $1000 each. The common stock currently sells for $48 per share nd has a beta of 1.50, the preffered stock urrently sells for $97 per share, and the bonds have 10 years to maturity and sell for 115% par. The market risk premium is 8.8%, T-bills are yielding 5%, and Raymond Mining's tax rate is 40%. What is the firm's market value capital structure? Debt? Equity? Preferred Stock? If Raymond 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?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter20: Financing With Derivatives

Section: Chapter Questions

Problem 14P

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