Five years ago, a company made a $500,000 investment in a new high-temperature material. The product did poorly after only 1 year on the market. However, with a new name and advertising campaign 4 years later it did much better. New development funds have been expended this year (year 5) at a cost of $1.5 million. Determine the external rate of return using the ROIC approach and an investment rate of 15% per year. The i* rate is 44.1% per year.

Year                 Cash Flow, $

0 .............           – 500,000

1 .............             400,000

2 .............                         0

3 .............                         0

4 .............          2,000,000

5 .............        –1,500,000