Titan Mining Corporation has 9.5 million shares of common stock outstanding, 390

Question

Titan Mining Corporation has 9.5 million shares of common stock outstanding, 390,000 shares of 5 percent preferred stock outstanding, and 205,000 8.3 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $43 per share and has a beta of 1.25, the preferred stock currently sells for $93 per share, and the bonds have 15 years to maturity and sell for 114 percent of par. The market risk premium is 8.3 percent, T-bills are yielding 4 percent, and Titan Mining

Titan Mining Corporation has 9.5 million shares of common stock outstanding, 390,000 shares of 5 percent preferred stock outstanding, and 205,000 8.3 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $43 per share and has a beta of 1.25, the preferred stock currently sells for $93 per share, and the bonds have 15 years to maturity and sell for 114 percent of par. The market risk premium is 8.3 percent, T-bills are yielding 4 percent, and Titan Mining

Explanation / Answer

a.    MVD = 205000($1,000)(1.14) = $233.7 M;    MVE = 9.5M($43) = $408.5M

               MVP = 390000($93) = $36.27M;   V = $233.7M + 408.5M + 36.27M = $678.47

               D/V =233.7/678.47 = .3444;    P/V = 36.27/678.47 = .0534;    E/V = 408.5/678.47 = .602

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.