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This is the last answer the previous Chegg assistant used and it is incorrect. Please update. I will vote if it is correct or not.
This is the last answer the previous Chegg assistant used and it is incorrect. Please update. I will vote if it is correct or not.
Lebleu, Incorporated, is considering a project that will result in initial aftertax cash savings of \\( \\$ 1.84 \\) 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 of equity of 12.4 percent, and an aftertax cost of debt of 5.2 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 +3 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.) Answer is complete but not entirely correctStep by Step Solution
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