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 requiring a

$$4,450,000$ 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

Variable expenses

Contribution margin

Fixed expenses:

Advertising, salaries, and other fixed out$-$of$-$

pocket costs $$790,000$

Depreciation $,890,000$

Total fixed expenses Net operating income

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

Required:

What is the project's net present value?

What is the project's internal rate of return to the nearest whole percent?

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.

What is the project's net present value?

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