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Titan Mining Corporation has 9.8 million shares of common stock outstanding, 420,000 shares of 5 percent preferred stock outstanding and 220,000 8.6 percent semi annual bonds outstanding, par value $1,000 each. The common stock currently sells for $46 per share and has a beta of 1.40, the preferred stock currently sells for $96 per share, and the bonds have 15 years to maturity and sell for 117 percent of par. The market risk premium is 8.6 percent, T-bills are yielding 4 percent, and the company’s tax rate is 40 percent.
a. What is the firm’s market value capital structure?
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?
McGilla Golf is evaluating a new golf club. The clubs will sell for $875 per set and have a variable cost of $430 per set. The company has spent $150,000 for a marketing study that determined the company will sell 60,000 sets per year for seven years..
Kordyk Corporation's bonds have a 15-year maturity, a 8.2% semiannual coupon, and a par value of $1,000. The going interest rate (YTM) is 8.0%, based on semiannual compounding. What is the bond’s price?
q1amulroney did not use working capital cash flows in her original analysis. the analysis aboveincludes incremental
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Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at rd = 8%, and its common stock currently pays a $2.75 dividend per share (D0 = $2.75). The stock's price is currently $30.50, its dividend is expected t..
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Union Brick Inc. (UBI) has a total market value of $200 million, consisting of 2 million shares of common stock selling for $50 per share and $100 million of 10 percent perpetual bonds currently selling at par. What is UBI's weighted average cost of ..
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