Problem: Locheed Tartan Corp. (LTC) is investigating a project that, in the absence of debt, will generate annual pretax cash flows of $5,500,000. LTC faces a tax rate of 34%. Its required return on unlevered equity for projects such as this is 9%, and its required return on debt is 8%. Suppose LTC will select a debt level and keep the dollar amount of debt constant in perpetuity. If the required investment for this project is $46,000,000, how much debt would the project need to support, in order that the project be worth doing?
a) The project has positive NPV even with no debt
b) $5,666,667
c) $15,111,111
d) $16,666,667
e) $44,444,444