Titan Mining Corporation has 9 million shares of common stock outstanding, 250,000 shares of 6% preferred stock outstanding and 105,000 7.5 percent semiannual bond outstanding, par value of $1000 each. The common stock currently sells for $34 per share and has a beta of 1.25, the preferred stock currently sells for $91per share and the bond have 15 years to maturity and sells for 93% of par. The market risk premium is 8.5 percent. T-bills are yielding 5 %, and Titan Mining tax is at 35%. 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, calculate WACC

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Titan Mining Corporation has 9 million shares of common stock outstanding, 250,000 shares of 6%
preferred stock outstanding and 105,000 7.5 percent semiannual bond outstanding, par value of $1000
each. The common stock currently sells for $34 per share and has a beta of 1.25, the preferred stock
currently sells for $91per share and the bond have 15 years to maturity and sells for 93% of par. The
market risk premium is 8.5 percent. T-bills are yielding 5 %, and Titan Mining tax is at 35%.
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, calculate WACC
Transcribed Image Text:Titan Mining Corporation has 9 million shares of common stock outstanding, 250,000 shares of 6% preferred stock outstanding and 105,000 7.5 percent semiannual bond outstanding, par value of $1000 each. The common stock currently sells for $34 per share and has a beta of 1.25, the preferred stock currently sells for $91per share and the bond have 15 years to maturity and sells for 93% of par. The market risk premium is 8.5 percent. T-bills are yielding 5 %, and Titan Mining tax is at 35%. 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, calculate WACC
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