(c) A commodity broker is contemplating the acquisition of a new computer-driven management information system (MIS). The hardware for this would cost an initial 4 million, whilst software and staff training would cost 1 million for each of the first two years operation, and 200 000 per year thereafter. After six years, the system would be due for replacement. However scrapping the current (manual) system would save staff costs of 1.5 million each year. To finance the new investment the broker would use a combina- tion of debt and equity capital in the ratio 1:3. The broker can borrow at an interest rate of 10%, whilst interest paid can be set against the corporation tax liability (currently taxed at 30%). The broker is a listed company with a current share price of 3.00, and current dividend of 15 pence. Over the period the share price is expected to grow at an annual rate of 6%. Use the above information to evaluate investment in the new