Ty Titan Mining Corporation has 9.4 million shares of common stock outstanding,
ID: 2661151 • Letter: T
Question
Ty
Titan Mining Corporation has 9.4 million shares of common stock outstanding, 380,000 shares of 4 percent preferred stock outstanding, and 200,000 8.2 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $42 per share and has a beta of 1.20, the preferred stock currently sells for $92 per share, and the bonds have 10 years to maturity and sell for 113 percent of par. The market risk premium is 8.2 percent, T-bills are yielding 3 percent, and Titan Mining
Titan Mining Corporation has 9.4 million shares of common stock outstanding, 380,000 shares of 4 percent preferred stock outstanding, and 200,000 8.2 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $42 per share and has a beta of 1.20, the preferred stock currently sells for $92 per share, and the bonds have 10 years to maturity and sell for 113 percent of par. The market risk premium is 8.2 percent, T-bills are yielding 3 percent, and Titan Mining
Explanation / Answer
MVD = 200000*1000*1.13 = 226 M
MVE = 9.4*42 = 394.8 M
MVP = 380000*92 = 34.96 M
Total market value of the firm is = 655.76 m
so the market value weights of the company
d/v = 226/655.76 = 0.344
p/v = 0.05331
e/v = 0.60204
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