Ophir Mining Corporation has 6.3 million ordinary shares outstanding; 350000, 5.8% preference shares outstanding, and...
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Finance
Ophir Mining Corporation has 6.3 million ordinary shares outstanding; 350000, 5.8% preference
shares outstanding, and 150000, 7.1% half-yearly bonds outstanding, par value $1000 each. The
ordinary shares currently sell for $74 and have a beta of 1.09; the preference shares sell for $107;
and the bonds have 20 years to maturity and sell for 109% of par. The market risk premium is
6.8%; government bonds are yielding 4.3%; and Ophir Minings tax rate is 30%. The book value
of one preference share is $100.
a.What is the firms market-value capital structure?
b. If Ophir Mining is evaluating a new investment project that has the same risk as the firms typical project, what rate should the firm use to discount the projects cash flows under a classical tax system?
show steps, plz, i will rate PS. especially the YTM steps.
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