Ch, Inc., is considering a project that will result in initial aftertax cash savings of $1.71 million at the end of the first year, and these savings will grow at a rate of 1 percent per year indefinitely. The company has a target debt-equity ratio of .75, a cost of equity of 11.1 percent, and an aftertax cost of debt of 3.9 percent. The cost-saving proposal is somewhat riskier than the usual projects the firm undertakes; management uses the subjective approach and applies an adjustment factor of +2 percent to the cost of capital for such risky projects.
Required:
a) What is the maximum initial cost the company would be willing to pay for the project?

Greenway industries is a major multinational conglomerate. its business units compete in a range of industries, including home appliances, pharmaceuticals, commercial real estate, and plastics manufacturing. although its largest business unit, which produces kitchen appliances, is among the most profitable in the industry, it generates only 35 percent of the company's revenues. which of the following is most likely true of greenway's stock price? a. it is valued at less than the sum of its individual business units. b. it is valued at greater than the sum of individual business units. c. it is valued at the exact sum of individual business units. d. it is consistently lower than the industry average.it is valued at greater than the sum of individual business units.