$4$

$8$ points

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Derrick Merson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division's return 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 $$3,000,000$ investment in equipment with a usefut life of five years and no salvage value. Holston Company's discount rate is $15\%.$ The project would provide net operating income each year for five years as follows:

$\backslash$table$[[$Sales$,,$$$2,500,000$