Based on market values, Gubler's Gym has an equity multiplier of 1.66 times. Shareholders require a return of 11.71 percent on the company's stock and a pretax return of 5.04 percent on the company's debt. The company is evaluating a new project that has the same risk as the company itself. The project will generate annual aftertax cash flows of $317,000 per year for 7 years. The tax rate is 35 percent. What is the most the company would be willing to spend today on the project?

Multiple Choice

• $1,495,285

• $1,820,067

• $1,630,474

• $1,546,846

• $1,592,342