What is the firm market value capital structure

Assignment Help Financial Management

Reference no: EM131186304

Titan Mining Corporation has 8.6 million shares of common stock outstanding and 300,000 5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.3, 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 Titan Mining’s tax rate is 40 percent.

a. What is the firm's market value capital structure? (Do not round intermediate calculations and round your final answers to 4 decimal places. (e.g., 32.1616)) Weight Debt

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? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Discount rate

Reference no: EM131186304

Questions Cloud

Between retirement and death based upon actuary tables : Your plan to retire exactly in 20 years.your goal is to create funds that will allow you to receive 20000 AT end of each year for 30 years between retirement and death based upon actuary tables. you know that you will be able to earn 11percent per ye..

How much money will be in account at end of that time period : For the next 3 years, you decide to place $3,803 in equal year-end deposits into a savings account earning 3.43 percent per year. How much money will be in the account at the end of that time period?

Assume that no dividends are paid : Mike was granted stock options on 1,000 shares of his employer's stock. The stock is currently selling for $27.70 a share and has a standard deviation of 36 percent. The option's strike price is $27.50 and the time to maturity is 10 years. What is th..

What is its estimated value per share : The firm’s weighted average cost of capital is 11%, and it has $1,500,000 of debt at market value and $400,000 of preferred stock at its assumed market value. The estimated free cash flows over the next 5 years, 2016 through 2020, are given below. Be..

What is the firm market value capital structure : Titan Mining Corporation has 8.6 million shares of common stock outstanding and 300,000 5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.3, and the bonds have 15 yea..

Make decisions on how to improve menus and profitability : Applebee’s is the largest casual dining chain in the world, with over 1800 locations throughout the U. S. and also in 20 other countries. The menu features beef, chicken, and pork items, as well as burgers, pasta, and seafood. What pieces of data wou..

The firm weighted average cost of capital : The firm’s weighted average cost of capital is 11%, and it has $1,500,000 of debt at market value and $400,000 of preferred stock at its assumed market value. The estimated free cash flows over the next 5 years, 2016 through 2020, are given below. Be..

Holding period return-money-market yield basis : A. An investor buys $1m face value of a new 91-day US T-Bill at a discount of 6.29%. What is the purchase price? B. The investor sells the bill 31 days later when discount rates have risen to 6.35%. What are the sale proceeds? C. What is the holding ..

Manufactures time series photographic equipment : Flotation Costs and NPV Photochronograph Corporation (PC) manufactures time series photographic equipment. It is currently at its target debt−equity ratio of .85. It’s considering building a new $58 million manufacturing facility. This new plant is e..

User Account

All Pages