3-a. Would the company want Derrick to pursue this investment opportunity? O Yes O No 3-b. Would Derrick be inclined to pursue this investment opportunity? O YesDerrick lyerson is a divisional manager for Holston lCompany. His annual pay raises are largely determined by his division's retum on investment [ROI], which has been above 20% each of the last three years. Derrick is considering a capital budgeting project that would require a $3,500,000 investment in equipment with a useful life of five years and no salvage value. Holston lCompany's discount rate is 10%. The project would provide net operating income each year for ve years as follows: Sales $3,000,000 1u'ariable expenses 1,250,000 Contribution margin 1350.000 Fixed expenses: Advertising. salaries, and other foed outofpoclret costs $650,000 Depreciation 650,000 Total xed expenses 1,300,000 Net operating income $ 450000 Use Excel or a nancial calculator to solve. Required: 1. Compute the project's net present value to the nearest dollar. _:| 2. Compute the project's simple rate of retum. [Round your answer to 1 decimal place. i.e. 0.123 should be considered as 12.3%.]