13.12 Finding the WACC Titan Mining Corporation has 8.7 million shares of common stock outstanding and 230,000 6.4 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $37 per share and has a beta of 1.20, and the bonds have 20 years to maturity and sell for 104 percent of par. The market risk premium is 7 percent, T-bills are yielding 3.5 percent, and the company?s tax rate is 35 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?
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