Net Investment and Discounted Rate of Return. A unit of equipment used in research and development can be acquired from a manufacturer at a \(\$ 200,000\) cost. If this equipment is acquired, an old unit of equipment that is fully depreciated will be sold for \(\$ 20,000\). Annual savings from using the new equipment, before deducting depreciation or taxes, have been estimated at \(\$ 80,000\). The new equipment is a 3-year class asset for MACRS depreciation purposes, should have a 5 -year life, and will have no salvage value. Income tax rate is 40 percent for all taxation items.

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1. Determine the net investment in the new equipment.

2. Will this investment be acceptable if the minimum ROR has been established at 16 percent? Explain.