Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his divisions return on investment (ROI), which has been above 24% each of the last three years. Casey is considering a capital budgeting project that would require a $5,050,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Companys discount rate is 20%. The project would provide net operating income each year for five years as follows:

Sales			$	4,700,000
Variable expenses				2,120,000
Contribution margin				2,580,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	830,000
Depreciation		1,010,000
Total fixed expenses				1,840,000
Net operating income			$	740,000

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:

1. What is the projects net present value?

2. What is the projects internal rate of return to the nearest whole percent?

3. What is the projects simple rate of return?

4-a. Would the company want Casey to pursue this investment opportunity?

4-b. Would Casey be inclined to pursue this investment opportunity?

Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division's return on investment (ROI), which has been above 24% each of the last three years. Casey is considering a capital budgeting project that would require a $5,050,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company's discount rate is 20%. The project would provide net operating income each year for five years as follows $ 4,700,000 2,120,000 2,580,000 Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation $ 830,000 1,010,000 1,840,000 $ 740,000 Total fixed expenses Net operating income Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables Required: 1. What is the project's net present value? 2. What is the project's internal rate of return to the nearest whole percent? 3. What is the project's simple rate of return? 4-a. Would the company want Casey to pursue this investment opportunity? 4-b. Would Casey be inclined to pursue this investment opportunity? Complete this question by entering your answers in the tabs below Req 2 Req 3 Req 1 Req 4A Req 4B What is the project's net present value? (Round your final answer to the nearest whole dollar amount.) Net present value Req 4B Req 3 Req 4A Req 2 Req 1 What is the project's internal rate of return? (Round your answer to whole decimal place i.e. 0.123 should be considered as 12%.) Internal rate of return Req 1 Req 2 Req 3 Req 4A Req 4B What is the project's simple rate of return? (Round percentage answer to 1 decimal place.) Simple rate of returr Req 3 Req 4A Req 1 Req 4B Req 2 Would the company want Casey to pursue this investment opportunity? Yes ONo Req 4A Req 4B Req 3 Req 2 Req 1 Would Casey be inclined to pursue this investment opportunity? OYes ONo