$6$

Problem $14-20$ WACC and NPV $($LO$4,5)$

$2$ points

Taber Inc. is considering a project that will result in initial after$-$tax cash savings of $$2\mathrm{.}1$ million at the end of the first year, and these savings will grow at a rate of $2\%$ per year indefinitely. The firm has a target debt$-$equity ratio of $\mathrm{.}80,$ a cost of equity of $11\%,$ and an after$-$tax cost of debt of $4\mathrm{.}6\%.$ 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 $+3\%$ 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 your intermediate calculations. Round the final answer to $2$ decimal places. Omit $ sign in your response.$)$

Maximum cost

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