10. 160 1.60 points Suppose you have been hired as a financial consultant to Defense Electronics, Inc. (DEI), a large, publicly traded firm that is the market share leader in radar detection systems (RDSs). The company is looking at setting up a manufacturing plant overseas to produce a new line of RDSs. This will be a five-year project. The company bought some land three years ago for $7 million in anticipation of using it as a toxic dump site for waste chemicals, but it built a piping system to safely discard the chemicals instead. If the land were sold today, the net proceeds would be $7.65 million after taxes. In five years, the land will be worth $7.95 million after taxes. The company wants to build its new manufacturing plant on this land; the plant will cost $13.2 million to build. The following market data on DEI's securities are current: 45,500 6.8 percent coupon bonds outstanding, 20 years to maturity, selling for 94.5 percent of par, the bonds have a $1,000 par value each and make semiannual payments. Debt: Common stock: 755,000 shares outstanding, selling for $94.50 per share; the beta is 1.25. Preferred stock: 35,500 shares of 6.2 percent preferred stock outstanding, selling for $92.50 per share. Market: DEl's tax rate is 35 percent. The project requires $850,000 in initial net working capital investment to get operational. 7 percent expected market risk premium; 5.2 percent risk-free rate