Capital Investment, Advanced Manufacturing Environment

For discount factors use Exhibit $128-1$ and Exhibit $12$B$-2.$

"I know that it's the thing to do$,"$ insisted Pamela Kincaid, vice president of finance for Colgate Manufacturing. $"$If we are going to be competitive, we need to build this completely automated plant."

"Another million will only cut the payback to about $9$ years," retorted Bill, "Ron, you're the marketing manager$-$do you have any insights?"

product is of higher quality and we can deliver it faster. I estimate that it'll increase our net cash benefits by another $$2,4$ million."

"Wow! Now that's impressive," Bill exclaimed, nearly convinced, "The payback is now getting down to a reasonable level."

capital."

"Now wait a minute, Pamela," Bill demanded. "You know that I usually insist on a $20\%$ rate of return, especially for a project of this magnitude."

Required:

$14\%$ rate

$20\%$ rate $x$

$x$