219k views
4 votes
Deep mines has 14 million shares of common stock outstanding with a beta of 1.15 and a market price of $42 a share. there are 900,000 shares of 9 percent preferred stock outstanding valued at $80 a share. the 10 percent semiannual bonds have a face value of $1,000 and are selling at 91 percent of par. there are 220,000 bonds outstanding that mature in 17 years. 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 discount rate should the firm apply to a new project's cash flows if the project has the same risk as the firm's typical project?

User Mennion
by
8.4k points

1 Answer

3 votes
Check the attached file for the answer.
Deep mines has 14 million shares of common stock outstanding with a beta of 1.15 and-example-1
User SvenAelterman
by
8.1k points