Titan Corporation has 5.4 million shares of common stock outstanding and 125,000 5.8 percent semiannual bonds outstanding, with a par value of $1,000 each. The common stock currently sells for $53 per share and has a beta of 1.15; the bonds have 25 years to maturity and sell for 103 percent of par. The market risk premium is 6.8 percent, T-bills are yielding 2.9 percent, and the company’s tax rate is 22 percent.

a. What is the firm’s market value capital structure?
b. If the company 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?