Landman Corporation $($LC$)$ manufactures time series photographic equipment. It is

currently at its target debt$-$equity ratio of $\mathrm{.}80.$ It's considering building a new $$42$ million

manufacturing facility. This new plant is expected to generate aftertax cash flows of $$5\mathrm{.}4$

million in perpetuity. The company raises all equity from outside financing. There are

three financing options:

A new issue of common stock: The flotation costs of the new common stock would be

$7\mathrm{.}2$ percent of the amount raised. The required return on the company's new equity is

$14$ percent.

A new issue of $20-$year bonds: The flotation costs of the new bonds would be $2\mathrm{.}8$

percent of the proceeds. If the company issues these new bonds at an annual coupon

rate of $5\mathrm{.}7$ percent, they will sell at par.

Increased use of accounts payable financing: Because this financing is part of the

company's ongoing daily business, it has no flotation costs and the company assigns

it a cost that is the same as the overall firm WACC. Management has a target ratio of

accounts payable to long$-$term debt of $\mathrm{.}15.$ Assume there is no difference between the

pretax and aftertax accounts payable costs.

What is the NPV of the new plant? Assume that LC has a $23$ percent tax rate. $($Do not

round intermediate calculations and enter your answer in dollars, not millions of

dollars, rounded to the nearest whole number, e$.$g$.,1,234,567.)$

NPV

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