Suppose you have been hired as a financial consultant to Defense Electronics, Incorporated $($DEI$),$ a large, publicly traded firm that is the market share leader in radar detection systems $($RDSs$).$ The company is looking at setting up a manufacturing plant overseas to produce a new line of RDSs$.$ This will be a five$-$year project. The company bought some land three years ago for $$7\mathrm{.}3$ million in anticipation of using it as a toxic dump site for waste chemicals, but it built a piping system to safely discard the chemicals instead. If the land were sold today, the net proceeds would be $$7\mathrm{.}79$ million after taxes. In five years, the land will be worth $$8\mathrm{.}09$ million after taxes. The company wants to build its new manufacturing plant on this land; the plant will cost $$13\mathrm{.}76$ million to build. The following market data on DEl's securities are current:

$\backslash$table$[[$Common stock:,$\backslash$table$[[93,8007\mathrm{.}2$ percent coupon bonds outstanding, $26$ years to maturity,$],[$selling for $93\mathrm{.}1$ percent of par; the bonds have a $$1,000$ par value each$],[$and make semiannual payments.$],[1,860,000$ shares outstanding, selling for $$95\mathrm{.}90$ per share; the beta is$]]],[$Preferred$,\backslash$table$[[88,000$ shares of $6\mathrm{.}4$ percent preferred stock outstanding, selling for$],[$$$93\mathrm{.}90$ per share.$]]]]$

DEl's tax rate is $24$ percent. The project requires $$920,000$ in initial net working capital investment to get operational.