Sommer, Inc., is considering a project that will result in initial aftertax cash savings of

$$1\mathrm{.}77$ 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 $\mathrm{.}75,$ a cost of equity of $11\mathrm{.}7$

percent, and an aftertax cost of debt of $4\mathrm{.}5$ 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 dollar amount, e$.$g$.,1,234,567.)$

Maximum cost