Raymond Mining Corporation has 9.2 million shares of common stock outstanding, 360,000 shares of 5 dollar preferred stock outstanding, and 157,000 7.5 percent semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $40 per share and has a beta of 1.60, the preferred stock currently sells for $96 per share, and the bonds have 15 years to maturity and sell for 111 percent of par. The market risk premium is 8.0 percent, T-bills are yielding 5 percent, and Adex Mining’s tax rate is 40 percent.

a.What is the firm’s market value capital structure for , Debt -Preferred stock-Equity ?  

b.If Raymond Mining is evaluating a new investment project that has the same risk as the firm’s typical project, what rate should the firm use to discount the project’s cash flows?