Titan Mining Corporation has 9 million shares of common share outstanding and 120,000 semiannual bonds outstanding, par value $1,000 each. The coupon rate on bonds is 6%. The common stock currently sells for $34 per share and has a beta of 1.20, and the bonds have 30 years to maturity and sell for 93% of par. The market risk premium is 10%, T-Bills are yielding 5%, and Titan Miningâ€™s tax rate is 35%. a. What are the weights based on market values?b. Compute the WACC?

Titan Mining Corporation has 9 million shares of common share outstanding and 120,000 semiannual bonds outstanding, par value $1,000 each. The coupon rate on bonds is 6%. The common stock currently sells for $34 per share and has a beta of 1.20, and the bonds have 30 years to maturity and sell for 93% of par. The market risk premium is 10%, T-Bills are yielding 5%, and Titan Miningâ€™s tax rate is 35%. a. What are the weights based on market values?b. Compute the WACC?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 13P

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