Photograph Corporation (PC) manufactures time series photographic equipment. It is currently at its target debt-equity ratio of 1.3. Its considering building a new

$45 million manufacturing facility. This new plant is expected to generate

after-tax cash flows of $5.7 million in perpetuity. There are three financing

options.

A new issue of 20-year bonds. If the company issues these new bonds at an annual coupon rate of 9% they will sell at par.

A new issue of common stock. The required return on the companys equity is 17%.

Increased use of accounts payable financing. Because this financing is part of the companys ongoing daily business, 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 0.20. (Assume there is no difference between the pretax and aftertax accounts payable costs).

What will be the NPV of the new plant? Assume that PC has a 35% tax rate.