Final answer:
The NPV of Landman Corporation's new manufacturing facility, if financed by issuing new common stock, would be -$16,827,150, indicating a reduction in the company's value.
Step-by-step explanation:
The Net Present Value (NPV) of Landman Corporation's new manufacturing facility can be calculated by determining the present value of the perpetual aftertax cash flows generated by the facility and subtracting the initial investment cost. The present value is found by dividing the expected perpetual cash flows of $7.41 million by the required return on equity of 15.1 percent, since option a suggests issuing new common stock and thereby not taking on any new debt. This calculation will not be affected by the cost of debt or accounts payable financing since new equity is being used. Therefore, the required return on new equity becomes the discount rate. The tax rate is not directly required in this calculation because the cash flows are already stated as aftertax. The NPV can be calculated as follows:
NPV = (Annual aftertax cash flows / Required return on new equity) - Initial investment cost
NPV = ($7.41 million / 0.151) - $65.9 million
NPV = $49.07285 million - $65.9 million
NPV = -$16.82715 million
Thus, if the new manufacturing facility is financed through new common stock issuance, the NPV of the investment would be -$16,827,150, which suggests that the investment would reduce the company's value by that amount.