Panda Inc. is considering a project that will result in initial aftertax cash savings of $1.75 miliion at the end of the first year, and these savings will grow at a rate of 2% per year indefinitely. The company has a target debt-equity ratio of .8, a cost of equity of 11.5%, and an aftertax cost of debt of 4.3%. The cost saving proposal is somewhat riskier that the usual projects the firm undertakes; management uses the subjective approach and applies and adjustment factor of +3% to the cost of capital for such risky projects.

What is the maximum initial cost the company would be willing to pay for the project?