Bossman, Inc. needs to purchase equipment for its 500 stores nationwide. The total cost of the equipment is $2.5 million. It is estimated that the after-tax cash inflows from the project will be $300,000 annually in perpetuity. Bossman has a market value debt-to-assets ratio of 40%. The firms cost of equity is 13%, its pre-tax cost of debt is 8%, and the flotation costs of debt and equity are 2.5% and 7%, respectively. The tax rate is 30%. Assume the project is of similar risk to the firms existing operations. What is the true cost for the project for Bossman?

Multiple Choice

$2,586,662

$2,596,684

$2,624,821

$2,637,131

$2,853,921