Answer:
9%
Explanation:
The first step is to understand the relevant terms in the question
Average Cost of New Capital
The cost of capital represents a required return rate (in percentage) an organisation or an individual ( in the case of John) will need to make a capital project advantageous, worthwhile or profitable.
In the case of John, the Average Cost of New Capital is 9%
MARR - Minimum Acceptable Rate of Return
This rate also in percentage represents the lowest or minimum rate of return a business or an individual is able to accept in order to start a given project. It is usually based on the risk of the project as well as the alternate benefit foregone if other projects were accepted.
It is also called the Hurdle rate, or the cutoff rate.
John's MARR is 18%
Based on these,
John's Net rate of return is calculated as follows
Minimum Acceptable Rate of Return - Average Cost of the New Capital
= 18% - 9% = 9%