Titan Mining Corporation has 8.5 million shares of common stock outstanding and 290,000 4 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $33 per share and has a beta of 1.25, and the bonds have 10 years to maturity and sell for 114 percent of par. The market risk premium is 7.3 percent, T-bills are yielding 6 percent, and the company’s tax rate is 38 percent.
a. What is the firm's market value capital structure? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
Weight
Debt
Equity
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?