9. Your firm is considering a capital investment in new technology that would lower after tax operating costs by $631,000 per year. The cost of acquiring the new technology is $2,000,000. It would be used for four (4) years, at the end of which time it would have no further value. The acquisition of the new technology would require the firm to raise debt and equity capital at a weighted average market rate of 10% per year. a. What is the estimated net present value of the proposed capital investment? b. What is the proposed capital investment's approximate internal rate of return?

9. Your firm is considering a capital investment in new technology that would lower after tax operating costs by $631,000 per year. The cost of acquiring the new technology is $2,000,000. It would be used for four (4) years, at the end of which time it would have no further value. The acquisition of the new technology would require the firm to raise debt and equity capital at a weighted average market rate of 10% per year. a. What is the estimated net present value of the proposed capital investment? b. What is the proposed capital investment's approximate internal rate of return?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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