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 $5,950,000 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: Sales $3 5, 399,999 Variable expenses 2,360,000 Contribution margin 2,940,000 Fixed expenses: Advertising, salaries, and other fixed outofpocket costs $ 890,000 Depreciation 1,190,000 Total fixed expenses 2,080,000 Net operating income $ 860,000