13 . Titan Mining Corporation has 8.9 million shares of common stock outstanding and 330,000 5 percentsemiannual bonds outstanding , par value $ 1,000 each . The common stock currently sells for $ 37 per share and has a beta of 1.45 , and the bonds have 15 years to maturity and sell for 118 percent of par . The market risk premium is 7.7 percent , T-bills are yielding 4 percent , and the company ’ s tax rate is 40 percent . ========================================================= FIN 571 Week 4 DQ 1
A firm uses a single discount rate to compute the NPV of all its potential capital budgeting projects , even though the projects have a wide range of nondiversifiable risk . The firm then undertakes all those projects that appear to have positive NPVs . Briefly explain why such a firm would tend to become riskier over time .
============================================== FIN 571 Week 4 DQ 2
a . What are the company ' s capital structure weights on a book value basis ? ( Do not round intermediate calculations and round your answers to 4 decimal places , e . g ., 32.1616 .)
b . What are the company ' s capital structure weights on a market value basis ? ( Do not round intermediate calculations and round your answers to 4 decimal places , e . g ., 32.1616 .)
c . Which are more relevant ?
13 . Titan Mining Corporation has 8.9 million shares of common stock outstanding and 330,000 5 percentsemiannual bonds outstanding , par value $ 1,000 each . The common stock currently sells for $ 37 per share and has a beta of 1.45 , and the bonds have 15 years to maturity and sell for 118 percent of par . The market risk premium is 7.7 percent , T-bills are yielding 4 percent , and the company ’ s tax rate is 40 percent . ========================================================= FIN 571 Week 4 DQ 1
FOR MORE CLASSES VISIT www . fin571tutor . com
A firm uses a single discount rate to compute the NPV of all its potential capital budgeting projects , even though the projects have a wide range of nondiversifiable risk . The firm then undertakes all those projects that appear to have positive NPVs . Briefly explain why such a firm would tend to become riskier over time .
============================================== FIN 571 Week 4 DQ 2