Please show all your work

MAY. Fashion Inc.s assets are $750 million, financed through bank loans, bonds, preferred stocks, and common stocks. The amounts are as follows: Bank loans: $ 100 million borrowed at 3% Bonds: $280 million, paying 8% coupon with semi-annual payments, and maturity of 10 years. MAY sold its $1,000 par-value bonds for $970 and had to incur $20 flotation cost per bond. Preferred Stocks: $120 million, paying $15 dividends per share. MAY sold its preferred shares for $220 and had to incur $20 per share flotation cost. Common Stocks: $250 million, beta is 3.20, the risk-free rate is 5 percent, and the market rate is 10%.

If MAY is subject to a 20% tax rate, what is the WACC?

MAY Fashions Inc. can invest $5 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and expected sales are 5 million jars of make-up a year. Fixed costs are $2 million a year, and variable costs are $1 per jar. The product will be priced a $2 per jar. Plant requires $50,000 in additional net working capital. The plant will be depreciated straight-line over 5 years to a salvage value of $50,000.

Using the WACC you have found above and the tax rate of 20 percent, please answer the following:

a. What is project NPV and IRR under these base-case assumptions? Accept or Reject?

b. What is NPV if variable costs turn out to be $1.20 per jar?

c. What is NPV if fixed costs turn out to be $1.5 million per year?

d. At what price per jar would the project NPV equal zero?