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 $4,200,000 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 $4,100,000 Variable expenses 1,380,00 Contribution margin 2,220,000 Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs $ 790,000 Depreciation 840,000 Totol fixed expenses 1,610.000 $10,000 Net operating Income Click here to view Exhib148.1 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. Complete this question by entering your answers in the tabs below. Reg Reg 2 Req3 Reg4 Reg 6 What is the project's net present value? (Round your final to the nearest whole dollar amount Net present value Rig 2 > wueretnine 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? 4-6. Would Casey be inclined to pursue this investment opportunity? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Req 4A Reg 48 What is the project's internal rate of return? (Round your answer to the nearest whole percentage, le 0.123 should be considered as 1296.) Instemal rate of return ( Req1 Req3 > factor(s) using tables 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? 4-6. Would Casey be inclined to pursue this investment opportunity? Complete this question by entering your answers in the tabs below. Reg 4A Reg 1 Reg 2 Reqs Reg 48 What is the project's simple rate of return? (Round your answer to 1 decimal place.) Simple rate of return ropriate discount factors) 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. Would the company want Casey to pursue this investment opportunity? 4-6 Would Casey be inclined to pursue this investment opportunity? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg Redan Reg 4B Would the company want Casey to pursue this investment opportunity? Yes ONO 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? 4-6. Would Casey be inclined to pursue this investment opportunity? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 4A Re 48 Would Casey be inclined to pursue this investment opportunity? Yes No
