Consider the following investment opportunity. Initial cost: $850,000 Annual revenues: $500,000 Annual operating costs, exclusive of depreciation: $200,000 Expected life: 20 years Salvage value after taxes: $40,000 Annual depreciation for tax purposes: $25,000 Tax rate: 34% Assume the annual figures are unchanged for the expected life of the investment. 1. What is the rate of return on this investment? 2. Assuming the investor wants to earn at least 12 percent, is this investment an attractive one?