3. The J. Lowes Corporation, which currently manufactures staples, is considering a

$1 million investment in a project in the aircraft adhesives industry. The corporation estimates unlevered after-tax cash flows (UCF) of $300,000 per year into perpetuity from the project. The firm will finance the project with a debt-to-value ratio of 0.5 (or, equivalently, a debt-to-equity ratio of 1:1).

The three competitors in this new industry are currently unlevered, with betas of 1.2, 1.3, and 1.4. Assuming a risk-free rate of 5 percent, a market-risk premium of 9 percent, and a corporate tax rate of 34 percent, what is the net present value of the project?