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 $7.3 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 $7.77 million after taxes. In five years, the land will be worth $8.07 million after taxes. The company wants to build its new manufacturing plant on this land; the plant will cost $13.68 million to build. The following market data on DEl's securities are current: Debt: 93,4007 percent coupon bonds outstanding, 24 years to maturity, selling for 93.3 percent of par; the bonds have a $1,000 par value each and make semiannual payments. Common stock: 1,820,000 shares outstanding, selling for $95.70 per share; the Preferred stock: 86,000 shares of 6.3 percent preferred stock outstanding, selling for $93.70 per share. Market: 7.05 percent expected market risk premium; 4.95 percent risk-free rate. DEl's tax rate is 22 percent. The project requires $910,000 in initial net working capital investment to get operational. 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 $7.3 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 $7.77 million after taxes. In five years, the land will be worth $8.07 million after taxes. The company wants to build its new manufacturing plant on this land; the plant will cost $13.68 million to build. The following market data on DEl's securities are current: Debt: 93,4007 percent coupon bonds outstanding, 24 years to maturity, selling for 93.3 percent of par; the bonds have a $1,000 par value each and make semiannual payments. Common stock: 1,820,000 shares outstanding, selling for $95.70 per share; the Preferred stock: 86,000 shares of 6.3 percent preferred stock outstanding, selling for $93.70 per share. Market: 7.05 percent expected market risk premium; 4.95 percent risk-free rate. DEl's tax rate is 22 percent. The project requires $910,000 in initial net working capital investment to get operational