Cloud Corporation (CC) plans to spend $5.5 million this year (denoted as year 0) to develop a new cloud computing platform. CC already has an agreement with 400 customers to buy its platformnext year (denoted as year 1). The customers will pay an annual subscription fee of $5,000 starting next year and for an unlimited number of years. The annual revenues for CC are estimated to continue forever constant, that is, think on the revenue as a perpetuity.

Since next year (denoted as year 1), the annual costs of operations and maintenance are estimated to be 40% of the revenue. Thus, these costs must be deducted from revenue to obtain the annual net income.

CC has $35 million of outstanding equity and $15 million of bank debt. The cost of equity is 16% and the cost of debt is 5%. The tax rate is 30% annual.

What is the net present value (NPV) of the project if using as discount rate the company's WACC?

$ 2.3 million

$4.3 million

$6.2 million

$9.8 million

$12.3 million