Landman Corporation (LC) manufactures time series photographic equipment. It is currently at its target debt-equity rati

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Landman Corporation (LC) manufactures time series photographic
equipment. It is currently at its target debt-equity ratio of .65.
It’s considering building a new $64 million manufacturing facility.
This new plant is expected to generate aftertax cash flows of $7.6
million in perpetuity. The company raises all equity from outside
financing. There are three financing options:
1. A new issue of common stock: The flotation costs of the new
common stock would be 7.2 percent of the amount raised. The
required return on the company’s new equity is 15 percent.
2. A new issue of 20-year bonds: The flotation costs of the new
bonds would be 2.7 percent of the proceeds. If the company issues
these new bonds at an annual coupon rate of 5 percent, they will
sell at par.
3. Increased use of accounts payable financing: Because this
financing is part of the company’s ongoing daily business, it has
no flotation costs, and the company assigns it a cost that is the
same as the overall firm WACC. Management has a target ratio of
accounts payable to long-term debt of .10. (Assume there is no
difference between the pretax and aftertax accounts payable
cost.)
What is the NPV of the new plant? Assume the company has a 22
percent tax rate. (Do not round intermediate calculations and enter
your answer in dollars, not millions, rounded to the nearest whole
number, e.g., 1,234,567.)