sommer, Inc., is considering a project that will result in initial after-tax cash saving of $1.9 million at the end of the first year, and these savings will grow at a rate of 1 percent per year indefinitely. The firm has a target debt-equity ratio of .75, a cost-savings proposal is somewhat riskier than the usual project the firm undertakes; management use the subjective approach and supplies and 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?