Finding the WACC Titan Mining Corporation has 9.3 million shares of common stock

Question

Finding      the WACC   Titan Mining      Corporation has 9.3 million shares of common stock outstanding and 260,000      6.8 percent semiannual bonds outstanding, par value $1,000 each. The      common stock currently sells for $34 per share and has a beta of 1.20, and      the bonds have 20 years to maturity and sell for 104 percent of par. The      market risk premium is 7 percent, T-bills are yielding 3.5 percent, and      Titan Mining's tax rate is 35 percent.   What is the firm's market value capital structure?

Explanation / Answer

Market Value of Outstanding Shares = 9.3m*34 = $316,200,000
Market Value of Debt = 260000*104 = $27,040,000

Cost of equity
= Risk Free Rate + Beta*Market Premium
= 3.5 + 1.2*7 = 11.69%

Cost of Debt
Let it be

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