Titan Mining Corporation has 9 million shares of common stock outstanding -

Titan Mining Corporation has 9 million shares of common stock outstanding. 0.5 million shares of 7 percent preferred stock outstanding, and 120,000 8.5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.20, the preferred stock currently sells for $83 per share, and the bonds have 15 years to maturity and sells for 93 percent of par. The market risk premium is 10 percent, T-bills are yielding 5 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? NOTE: This question is NOT our property; we are only suggesting solution of this question.

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