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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

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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 that would require a $5,380,000 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: $ 4,800,000 2,160,000 2,640,000 Sales Variable expenses Contribution margin Fixed expenses Advertising, salaries, and other Fixed out-of-pocket costs Depreciation Total fixed expenses Net operating income $ 840,000 1,076,000 1,916,000 724,000 Click here to view Exhibit 14B-1 and Exhibit 14B-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. Reg 1 Reg 2 Reg 3 Reg 4 Req 48 What is the project's net present value? (Round your final answer to the nearest whole dollar amount.) Not present value Req 2 > Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 43 What is the project's internal rate of return? (Round your answer to the nearest whole percentage, I.. 0.123 should be considered as 12.) Itaal te ofruum % Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Req 4A Req 48 What is the project's simple rate of return? (Round your answer to 1 decimal place.) Simple rate of return % Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 48 Would the company want Casey to pursue this investment opportunity? Yes NO Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 48 Would Casey be inclined to pursue this investment opportunity? Yes No

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