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 23% each of the last three years. Casey is considering a capital budgeting project requiring a $4,700,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company's discount rate is 19%. The project would provide net operating income each year for five years as follows: Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of- pocket costs $ 4,400,000 2,000,000 2,400,000 Depreciation Total fixed expenses Net operating income $ 800,000 940,000 1,740,000 $660,000 Click here to view Exhibit 14B-1 and Exhibit 148-2, 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. Required 1 Required 2 Required 3 Required 4A Required 48 What is the project's net present value? Note: Round your final answer to the nearest whole dollar amount. Not present value Required 1 Required 2 > 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. Required 1 Required 2 Required 3 What is the project's internal rate of return? Required 4A Required 4B Note: Round your answer to the nearest whole percentage, i.e. 0.123 should be considered as 12%. Internal rate of return % Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4A Required 4B What is the project's simple rate of return? Note: Round your answer to 1 decimal place. Simple rate of return % < Required 2 Required 4A > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4A Required 4B Would the company want Casey to pursue this investment opportunity? < Required 3 Required 4B > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4A Required 4B Would Casey be inclined to pursue this investment opportunity? < Required 4A Required 48 EXHIBIT 14B-1 Present Value of $1; 1 ((1+1)) Periods 4% 1 2 3 4 5% 6% 7% 0.962 0.952 0.943 0.935 0.925 0.907 0.890 0.873 0.864 0.889 0.855 0.823 12% 14% 0.659 $ 0.822 0.784 6 7 8 9 0.703 0.645 10 0.676 0.614 11 0.650 0.585 0.527 12 13 14 15 16 17 18 0.153 0.130 0.111 19 20 21 22 23 28 29. 30 40 21% 22% 23% 8% 13% 9% 10% 11% 16% 17% 19% 18% 20% 15% 0.926 | 0.917 0909 0.901 093 0.885 0.877 0.870 0.862 0.855 0.847 0.826 0.820 0813 0.806 0.840 0.833 0.857 0.842 0.826 0812 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694 0.683 0.672 0.661 0.650 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 0.564 0.551 0.537 0.524 05121 0.792 | 0.763 | 0.735 0.708 0.683 0.636 0.613 0.592 0.572 0.552 | 0.534 0.516 0.499 0.482 0.467 0.451 0.437 0423 0410 0.747 0.713 0.681 0.650 0.621 0.593 0.341 0.328 0.567 0.543 0.519 0476 0.456 0.437 0.497 0.419 0402 0.386 0.370 0.355 0.275 0.262 0.790 0.746 0.705 0.666 0630 0.596 0.564 0410 0.390 0.370 0.352 0.335 0.319 0.303 0.535 0.507 0480 0.456 0.432 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 | 0.376 0.354 0.333 0.314 0.296 0.279 0.263 0.249 0.235 0.222 0.210 0.731 0677 0627 0.582 0.540 0.502 0467 0434 0404 0.376 0.351 0.327 0.305 0.285 0.266 0.249 0.233 0.218 0.204 0.392 0.544 0.500 0.460 0424 0.391 0361 0.33 0.308 0.225 0.209 0.194 0.180 0.167 0.284 0.263 0.243 0.508 0.558 0463 0422 0.386 0352 0322 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0.162 0.149 0.137 0.126 0.094 0086 0475 0429 0.162 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.195 0.178 0.148 0.135 0.123 0.112 0.103 0.625 0.557 0.497 0.444 0.397 0356 0319 0.286 0.257 0.231 0.208 0.187 0.168 0.152 0.137 0.124 0.112 0.102 0.092 0.083 0.076 0.069 0601 0.530 0469 0415 0.368 0.326 0.290 0.255 0.229 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.093 0.064 0.075 0.068 0.061 0.055 0.577 0.505 0.442 0.388 0.340 0.299 0.261 0.232 0.205 0.181 0.160 0.141 0.125 0.111 0.099 0088 0.078 0.069 0.062 0.055 0.049 0.044 0.555 0.481 0.417 0.362 0315 0.275 0239 0.209 0.183 0.160 0.140 0.123 0.108 0.095 0.084 0.074 0.065 0.057 0.051 0045 0.040 0035 0534 0458 0.394 0339 0.292 0.252 0.218 0.188 0.163 0.141 0.123 0.107 0.095 0.081 0071 0062 0.054 0.047 0.042 0.036 0.032 0.028 0.513 0436 0371 0317 0.270 0.231 0.198 0.170 0.146 0.125 0.108 0.093 0.080 0.069 0.060 0.052 0.045 0.039 0.034 0.030 0.026 0.023 0494 0416 0.350 0.296 0.250 0.212 0.180 0.095 0.081 0.069 0.059 0.051 0.044 0.038 0.028 0.024 0.021 0.018 0475 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 0.098 0.083 0.070 0.060 0051 0043 0.037 0.031 0.027 0.023 0,020 0.017 0.014 0456 0.377 0312 0.258 0.215 0.178 0.149 0.124 0.104 0.087 0.073 0.061 0.051 0.043 0.037 0.031 0.026 0.022 0.019 0.016 0.014 0.012 0439 0.359 0.294 0.242 0.199 0.164 0.135 0.112 0.093 0.077 0.064 0.053 0.044 0.037 0.031 0.026 0.022 0018 0.015 0.013 0.011 0.009 0422 0.342 0.278 0.226 0.184 0.150 0.123 0.101 0.083 0.068 0.056 0046 0.038 0.032 0.026 0.022 0.018 0.015 0.013 0.011 0.009 0.007 0406 0.326 0.262 0.211 0.170 0.138 0.112 0.091 0.074 0.060 0.049 0.040 0.033 0.027 | 0.022 0018 0.015 0.012 0.010 0.009 0.007 0.006 24 0.390 0310 0.247 0.197. 0.158 0.126 0.102 0.082 0.066 0.053 0.043 0.035 0028 0.023 0019 0.015 0.013 0.010 0.008 0.007 0.006 0.005 25. 0375 0.295 0.233 0.184 0.146 0.116 0.092 0.074 0.059 0.047 0.038 0.030 0.024 0.020 0,016 0.013 0.010 0.009 0.007 0.006 0.005 0.004 26 0.361 0.281 0.220 0.172 0.135 0.106 0.084 0.066 0.053 0.042 0.033 0.026 0.021 0.017 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 27 0.347 0.268 0.207 0.161 0.125 0.098 0.076 0.060 0.047 0.037 0.029 0.023 0.018 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0.002 0.333 0.255 0.196 0.150 0.116 0.090 0.069 0.054 0.042 0.033 0.026 0.020 0.016 0.012 0.010 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.321 0.243 0.185 0.141 0.107 0.082 0.063 0.048 0.037 0.029 0.022 0.017 0.014 0.011 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.002 0308 0.231 0.174 0.131 0.099 0.075 0.057 0.044 0.033 0.026 0.020 0.015. 0.012 0.009 0.007 0.005 0.004 0.003 0.003 0.002 0.002 0.001 0.208 0.142 0.097 0.067 0.046 0032 0.022 0.015 0.011 0.008 0.005 0.004 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 24% 25% 0.800 0.640 0.289 0.191 0.179 0.168 0.155 0.144 0.134 0.116 0.107 0.032 EXHIBIT 14B-2 Present Value of an Annuity of $1 in Arrears, 10+ Periods 4% 1 0.962 2 1.886 5% 6% 0.952 0.943 1859 1833 7% 8% 9% 0.935 0.926 0.917 1.808 1.783 1.759 10% 0.909 1.736 3 4 5 6 7 4.100 4.767 5.389 4.623 5.206 9 10 11 12 13 6.002 14 15 16 17 18 19 20 21 22 23 24 25 26 8488 27 28 29 30 8.951 40 24% 22% 25% 23% 11% 12% 20% 13% 21% 14% 15% 17% 18% 16% 19% 0813 0.806 0.800 0.901 0.893 0.885 0877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 1585 1440 1.713 1.492 1474 1457 1.566 1.690 1.668 1.647 1626 1.605 1547 1528 1.509 2.042 2011 1981 1.952 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2444 2.402 2.361 2.322 2.283 2.246 2.210 2.174 2.140 2.106 2074 2.494 2.448 2.404 2.362 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.102 3.037 2.974 2.914 2.855 2.798 2.743 2.690 2.639 2.589 2.540 2.689 4452 4329 4.212 3.993 3.890 3.791 3.696 3.605 3517 3433 3.352 3.274 3.199 3.127 3.058 2.991 2.926 2.864 2.803 2.745 5.242 5076 4917 3.020 2.951 3.167 3.092 4.486 3.998 3389 4.355 4.231 4.111 3.784 3.685 3.589 3498 3410 3.326 3.245 6002 5.786 5582 4.868 4.712 4.564 4423 4.288 3.416 3.327 3.242 3.161 5033 4.160 4039 3.922 3812 3.706 3.605 3.508 3.837 3.726 4.078 3.954 3619 3.518 3.421 3329 6.733 6463 6210 5.971 5.747 5.535 5.335 5.146 4.968 4.799 4.639 4.487 4.344 4207 7435 7.108 6.802 6515 6.247 5.995 5.759 5.537 5.328 5.132 4.946 4.772 4607 4451 4.303 4.163 4031 3.905 3.786 3.673 3.566 3.463 8.111 7.722 7.360 7024 6.710 6418 6.145 5889 5.650 5.426 5.216 5.019 4833 4659 4494 4.339 4.192 4.054 3.923 3.799 3.682 3.571 3.902 8.760 8.306 7.887 6.495 6.207 5.938 5.687 3.776 3.656 7499 7.139 6805 5453 5.234 5029 4.836 4.656 4486 4327 4.177 4.035 8863 8.384 7.943 7536 7.161 4.793 4.611 449 4.27K 4.127 3.985 6.814 6492 6.194 5.918 5.660 5.421 5.197 4988 9.385 3.51 3.725 4.053 3912 3.780 9.986 9.394 353 358 7.904 7487 7.103 6.750 6424 6.122 5.842 5.583 5342 5.118 4.910 4.715 4533 4.362 4.203 10.563 9.899 3824 9.295 8.745 8.244 7.786 7.367 6.982 5628 6.302 5.724 548 5229 5008 4.302 4.611 4432 4.265 4.108 3.962 11.118 10.380 9.712 9.10% 559 8061 7.606 7191 6.8116462 3859 6.142 5.847 5.575 5.324 5092 4.876 4.675 4489 4315 4.153 4.001 11.652 10.838 10.106 9447 851 8313 7824 7379 6.974 6604 6265 5.954 5668 5405 5.162 4.938 4.730 4536 4.357 4.189 4033 3887 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.549 7.120 6.729 6373 6.047 5.749 5475 5.222 4.990 4.775 4576 4.391 4.219 4059 4419 4.243 4.080 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.702 7.250 6840 6467 6.128 5.818 5534 5.273 5.033 4.812 4.608 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.839 7.366 6.938 6.550 6.198 5.877 5584 5316 5.070 4.843 4.635 4.442 4.263 4.097 3.942 6.623 4.870 6.259 5.929 5.628 5.353 5.101 4.657 4.460 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.963 7469 7.025 4.279 4.110 3.954 14.029 12.821 11.764 10.836 10.017 9.292 8649 8.075 7.562 7.102 6687 6312 5.973 5.665 5.384 5.127 4.891 4.675 4476 4.292 4.121 3.963 4.302 4.130 4.690 4.488 3.970 14:451 13.163 12.042 11.061 10.201 9.442 8.772 8.176 7.645 7.170 6.743 6.359 6.011 5696 5.410 5.149 4.909 14.857 13.489 12.303 11.272 10.371 9.580 8883 8.266 7718 7.230 6.792 6.399 6044 5.723 5.432 5.167 4.925 4.703 4.499 4.311 4.137 3.976 15.247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 7.784 7283 6.835 6434 6073 5.746 5451 5.182 4.937 4.713 4.507 4.318 4.143 3.981 15 622 14 094 12 783 11 654 10.675 9.823 9077 8.422 7.843 7.330 6.873 6.464 6.097 5.766 5.467 5.195 4.948 4.721 4514 4.323 4.147 3.985 15.983 14.375 13.003 11 826 10.810 9.929 9.161 7.896 7372 6.906 4.956 6.491 6.118 5.783 5480 5.206 4.728 4520 4.328 4.151 3.988 16.330 14.643 13.211 11.987 10.935 10.027 9.237 8.548 7.943 7.409 6.935 6.514 6.136 5.798 5.492 5.215 4.964 4.734 4.524 4.332 4.354 3.990 16.663 14.898 13.406 12.137 11.051 10.116 9.307 8.602 7.984 7441 6.961 6534 6.152 5.810 5.502 5.223 4.970 4.739 3.992 4528 4.335 4.157 16.984 15.141 13.591 12.278 11.158 10.198 9.370 8.650 8.022 7470 6983 6.551 6.166 5.820 5.510 5.229 4.337 4.975 4.743 4.531 6.566 6.177 5.829 5517 5.235 4.979 17.292 15.372 13.765 12.409 11 258 10.274 9427 8.694 8055 7496 7.003 4.746 4.534 4.339 19.793 17.159 15.046 13.332 11 925 10.757 9.779 8.244 7634 7.105 6.642 6.233 5.871 5.548 5.258 4.997 4.760 4544 4.347 4.166 3.910 3.928 4.159 3.994 4.160 3995 3.999