Question 4 Mexicana Ltd (Mexicana) is a company that operates in the food industry and has only variable costs (no fixed costs). The company has a market value debt-to-equity ratio of 40% and makes interest payments of 42,242 at the end of each year. Annual cash inflows for Mexicana are 1,200,000 and annual variable costs excluding the interest are 833,902.67. These cash flows are expected to continue in perpetuity. Assume that the unlevered cost of equity capital is 10 per cent and the pre-tax cost of debt is 5 per cent. The corporate tax rate for Mexicana is 25 per cent. Required: i) Calculate the levered cash flow to Mexicana's equity holders. Explain your workings. (10 Marks) ii) Calculate the market value of Mexicana's equity using the flow-to-equity (FTE) method. Explain your workings. (20 Marks) I iii) Calculate the market value of Mexicana's debt. Explain your workings. (10 Marks) iv) Calculate the weighted average cost of capital (WACC) for Mexicana Ltd. Explain your workings. (10 Marks)