Question: Scanlin, Inc., is considering a project that will result in initial aftertax cash savings of $5.1 million at the end of the first year, and
Scanlin, Inc., is considering a project that will result in initial aftertax cash savings of $5.1 million at the end of the first year, and these savings will grow at a rate of 4 percent per year indefinitely. The firm has a target debt-equity ratio of 0.63, a cost of equity of 14 percent, and an aftertax cost of debt of 6 percent. The cost-saving proposal is somewhat riskier than the usual project the firm undertakes; management uses the subjective approach and applies an adjustment factor of 2.1 percent to the cost of capital for such risky projects. (Do not include the dollar sign ($). Do not round your intermediate calculations. Round your answer to the nearest whole number. (e.g., 32)) The project should only be taken if its cost is less than $_______
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