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Titan Mining Corporation has 14 million shares of common stock outstanding, 900,000 shares of 9 percent preferred stock outstanding and 210,000 ten percent semiannual bonds outstanding, par value $1,000 each

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Titan Mining Corporation has 14 million shares of common stock outstanding, 900,000 shares of 9 percent preferred stock outstanding and 210,000 ten percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $34 per share and has a beta of 1.15, the preferred stock currently sells for $80 per share, and the bonds have 17 years to maturity and sell for 91 percent of par, and an after tax yield to maturity of 7.6%. The market risk premium is 11.5 percent, T-bills are yielding 7.5 percent, and the firm's tax rate is 32 percent. What is Titan Mining Corporation's Weighted average cost of capital.

Solve for the Market Value of each asset class.

MV_D =

MV_E =

MV_P =

Total Value of the Firm =

 

 

Solve for the percent in each asset class:

 

D/V =

E/V =

P/V =

 

Solve for the Return of

 

Equity, applying CAPM

Debt, given in the question

Preferred, formula for solving for R = D / r

 

 

What is the Weighted Average Cost of Capital (WACC) for Titan Mining Company