MTD Corp. is considering an important capital project it will raise external capital to finance. The firm is financed in part by equity investors and in part by rolling over $$500$ million par value of $10-$year annual bonds on which it pays interest totaling $$30$ million per year. Each bond has a face value of $$1,000.$ The flotation costs for a new bond issue would be $1\%$ of the total proceeds. Over the past decade, the firm has maintained an average compound growth rate of $4\mathrm{.}2\%$ in its dividends, a rate analysts expect it can maintain. This year, each common share received a total of $$3\mathrm{.}00$ worth of dividends. These shares are trading at $$50$ but the net proceeds from issuing new shares would be only $$48\mathrm{.}50$ each $($floatation costs are $$1\mathrm{.}50/$share$).$ MTD presently has $8,000,000$ common shares outstanding. Finally, MTD$\text{'}$s investment bankers estimate that new preferred shares providing a $$2$ annual dividend could be issued to investors at $$24$ per share to 'net' MTD $$22$ per share issued $($after $$2$ flotation costs per share$).$ The firm already has $1,000,000$ of these preferred shares outstanding. Its tax rate is $20\%.$

a$)$ Assume that MTD$\text{'}$s preferred shares are trading at $$24$ in the market, the bonds at $$950$ and the common shares at $$50.$ Using this information determine the current capital structure $($WACC component weights$)$ of the firm based on existing market value weights.

b$)$ Using its current capital structure, what is MTD$\text{'}$s weighted average cost of capital?

c$)$ The project under consideration is expected to produce annual after$-$tax cash flows of $$12,000,000$ per year for each of the next three years. It is considered to be of similar risk to the risk of the firm itself. It will cost MTD $$30,000,000$ this year to get this project up and running. Assuming the firm keeps its current market value capital structure by proportionally issuing new securities to finance it$,$ calculate the project$$s NPV$.$