Problem $14-20$ WACC and NPV LO$3,5]$

Lebleu, Incorporated, is considering a project that will result in initial aftertax cash savings of $$1\mathrm{.}85$ million at the end of the first year, and these savings will grow at a rate of $3$ percent per year indefinitely. The firm has a target debt$-$equity ratio of $\mathrm{.}85,$ a cost of equity of $12\mathrm{.}5$ percent, and an aftertax cost of debt of $5\mathrm{.}3$ percent. The cost$-$saving proposal is somewhat riskier than the usual project the firm undertakes; management uses the subjective approach and applies an adjustment factor of $+2$ percent 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? $($Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e$.$g$.,1,234,567.)$

Maximum cost