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Exercise $14-9($Algo$)$ Net Present Value Analysis and Simple Rate of Return $[$LO$14-2,$ L$014-6]$

Derrick Iverson 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 $25\%$ each of the last three years. Derrick is considering a capital budgeting project requiring a

$$4,650,000$ investment in equipment with a useful life of five years and no salvage value. Holston Company's discount rate is $18\%.$ The

project would provide net operating income each year for five years as follows:

Click here to view Exhlblt $14$B$-1$ and Exhlblt $14$B$-2,$ to determine the appropriate discount factor$($s$)$ using tables.

Required:

Compute the project's net present value.

Compute the project's simple rate of return.

$3$a$.$ Would the company want Derrick to pursue this investment opportunity?

$3$b$.$ Would Derrick be inclined to pursue this investment opportunity?

Answer is not complete.

Complete this question by entering your answers in the tabs below.

Required $2$

Required $3$A

Required $3$B

Compute the project's net present value.

Note: Round your final answer to the nearest whole dollar amount.