FIN 571 TUTOR Motivated Minds/fin571tutor.com FIN 571 TUTOR Motivated Minds/fin571tutor.com | Page 63

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.