Titan Mining Corporation has 9.3 million shares of common stock outstanding, 370

Question

Titan Mining Corporation has 9.3 million shares of common stock outstanding, 370,000 shares of 6 percent preferred stock outstanding, and 195,000 8.1 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $41 per share and has a beta of 1.15, the preferred stock currently sells for $91 per share, and the bonds have 20 years to maturity and sell for 112 percent of par. The market risk premium is 8.1 percent, T-bills are yielding 4 percent, and Titan Mining

Explanation / Answer

a. What is the firm’s market value capital structure

Debt market value = 195,000 *1120 = 186     218.40million

Equity market value = 9.3 million * 41 = 381.3 million

Preferred Cost = 370,000 * 91 = 33.67million

Total market value                              633.37million

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