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 $5,850,000 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: $ 5,200,000 2,320,000 2,880,000 Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses Net operating income $ 880,000 1,170,000 2,050,000 830,000 Click here to view Exhibit 12B-1 and Exhibit 12B-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? 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. Req 1 Req 2 Req3 Req 4A Req 4B What is the project's net present value? (Round your final answer to the nearest whole dollar amount.) Net present value Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4A Req 4B What is the project's simple rate of return? (Round your answer to 1 decimal place.) Simple rate of return % EXHIBIT 12B-1 Present Value of $1; (1+r) 14% 21% Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 3% 15% 16% 7% 18% 19% 20% 22% 23% 24% 25% 0962 0952 0943 0935 0926 097 0909 0901 0893 0.885 087 0870 0862 0855 0847 0840 0833 0826 0820 083 0806 0800 2 0925 0907 0890 0873 0857 0842 0826 0812 0797 0.783 0769 0756 0743 0731 0.718 0706 0694 0683 0672 0661 0.650 0.640 3 0889 0864 0840 0816 0794 072 0751 0731 0712 0.693 0675 0658 0641 0624 0609 0.593 0579 0564 0551 0537 0.524 0512 4 0855 0823 0792 0763 0735 0708 0683 0659 0.636 0.613 0.592 0572 0552 0534 056 0499 0482 0467 0451 0437 0423 0410 5 0822 0784 0.747 07/13 0681 0650 0621 0593 0.567 0543 0.519 0497 0476 0456 0437 0419 0402 0386 0370 0355 0.341 0328 6 0790 0.746 0.705 0.666 0.630 0596 0564 0535 0507 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0.335 0.319 0303 0.289 0.275 0.262 7 0760 0711 0665 0.623 0.583 0547 0.53 0.482 0.452 0.425 0.400 0.376 0354 0333 0.314 0.296 0.279 0.263 0.249 0.235 0.222 0.210 8 0731 067 0627 0582 0.540 0.502 0.467 0434 0404 0.376 0.351 0327 0305 0285 0.266 0.249 0.233 0218 0204 0191 0.179 0168 9 0703 0645 0592 0544 0.500 0460 0424 0391 0.361 0.333 0.308 0284 0263 0243 0225 0.209 0194 0180 0.167 0.155 0.144 0.134 10 0676 0.614 0.558 0.508 0.463 0.422 0386 0352 0322 0.295 0.270 0.247 0227 0.208 0191 0.176 0162 0149 0137 0126 0.116 0.107 11 0650 0585 0.527 0.475 0.429 0388 0350 037 0287 0261 0237 0215 0195 0.178 0162 0.148 0.135 0123 0.112 0103 0.094 0.086 12 0625 0.557 0.497 0.444 0.397 0356 0319 0.286 0.257 0.231 0.208 0187 0168 0152 0.137 0.124 0112 0102 0.092 0.083 0.076 0.069 13 0601 0530 0.469 0.45 0.368 0326 0.290 0.258 0.229 0.204 0.182 0.163 0.145 0130 0116 0.104 0.093 0.084 0075 0068 0.061 0.055 14 057 0505 0442 0.388 0340 0299 0263 0232 0205 0181 0.160 0.141 10125 011 0.099 0.088 0.078 0.069 0062 0.055 0.049 0.044 5 0555 0481 047 0362 0.315 0275 0239 0209 0183 0.160 0140 0123 0108 0095 0.084 0074 0065 0057 0051 0045 0040 0035 16 0534 0458 0.394 0339 0.292 0252 0218 0188 0163 0.141 0123 0107 0093 0081 0071 0.062 0054 0047 0042 0036 0032 0.028 7 053 0436 0371 0317 0.270 0.231 0198 0170 0.146 0125 0108 0093 0080 0069 0.060 0.052 0045 0039 0034 0030 0.026 0.023 18 0494 0416 0.350 0.296 0.250 0212 0180 0153 0130 0111 0.095 0081 0069 0.059 0.051 0.044 0038 0032 0028 0024 0.021 0.018 19 0475 0.396 0331 0.27 0.232 0194 0164 0138 0116 0.098 0.083 0070 0.060 0051 0.043 0.037 0.031 0027 0023 0.020 0.07 0.014 20 0456 0377 0312 0.258 0215 0.178 0149 0124 0104 0.087 0.073 0061 0051 0043 0037 0.031 0026 0022 0019 0016 0.04 0.012 21 0439 0359 0294 0.242 0199 0164 0135 012 0093 0.077 0064 0053 0044 0037 0031 0.026 0.022 0018 005 0013 0.011 0.009 22 0422 0342 0278 0.226 0184 0150 0123 0101 0.083 0.068 0.056 0046 0038 0032 0.026 0.022 0018 0015 0013 0.011 0.009 0.007 23 0406 0326 0262 0.211 0170 0138 0112 02091 0074 0.060 0.049 0040 0033 0027 0022 0018 0015 0012 0010 0009 0.007 0006 24 0390 0310 0.247 0197 0158 0.126 0102 0082 0066 0.053 0.043 0035 0028 0023 0019 0.015 0013 0010 0008 0007 0.006 0.005 25 0375 0295 0233 0184 0.146 0116 0.092 0074 0.059 0.047 0.038 0030 0024 0020 0016 0.013 0.010 0009 0.007 0.006 0.005 0.004 26 0361 0281 0220 0172 0.135 0106 0084 0066 0053 0042 0033 0026 0021 007 004 001 0009 0007 0006 0005 0004 0003 27 0347 0.268 0207 0161 0125 0098 0076 0060 0047 0.037 0029 0023 0018 0014 001 0.009 0007 0006 0005 0004 0.003 0.002 28 0333 0255 0196 0150 0.116 0090 0069 0054 0042 0033 0026 0020 0016 0012 0010 0008 0006 0005 0004 0003 0002 0002 29 0321 0243 0185 0.141 0107 0082 0063 0048 0037 0029 0022 007 0014 001 0.008 0.006 0005 0004 0003 0002 0.002 0.002 30 0308 0231 0174 0.131 0.099 0075 0057 0044 0.033 0026 0.020 0015 0012 0009 0007 0.005 0004 0003 0003 0.002 0.002 0.001 40 0208 0.142 0097 0.067 0046 0032 0022 0015 001 0.008 0005 0.004 0003 0002 0001 0.001 0001 0.000 0000 0000 0.000 0.000 EXHIBIT 12B-2 Present Value of an Annuity of $1 in Arrears; 7 9.712 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.800 2 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.713 1.690 1.668 1.647 1.626 1.605 1.585 1.566 1.547 1.528 1.509 1.492 1.474 1457 1.440 3 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.444 2.402 2.361 2.322 2.283 2.246 2.210 2.174 2.140 2.106 2074 2.042 2011 1.981 1.952 4 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 2.494 2.448 2.404 2.362 5 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.696 3.605 3.517 3.433 3.352 3.274 3.1993.127 3.058 2.991 2.926 2.864 2.803 2.745 2.689 6 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.231 4.111 3.998 3.889 3.784 3.685 3.589 3.498 3.410 3.326 3.245 3.167 3.092 3.020 2.951 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.712 4.564 4.423 4.288 4160 4.039 3.922 3.812 3.706 3.605 3.508 3.416 3.327 3.242 3.161 8 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 4.799 4.639 4.487 4.344 4.207 4.078 3.954 3.837 3.726 3.619 3.518 3.421 3.329 9 7.435 7108 6.802 6.515 6.247 5.995 5.759 5.537 5.328 5.132 4.946 4.772 4.607 4.451 4.303 4.163 4.031 3.905 3.786 3.673 3.566 3.463 10 8.111 7.722 7.360 7024 6.710 6.418 6.145 5.889 5.650 5.426 5.216 5.019 4.833 4.659 4.494 4.339 4.192 4.054 3.923 3.799 3.682 3.571 11 8.760 8.306 7.887 7.499 7139 6.805 6.495 6.207 5.938 5.687 5.453 5.234 5.029 4.836 4.656 4.486 4.327 4.177 4.035 3.902 3.776 3.656 12 9.385 8.863 8.384 7.943 7.536 7161 6.814 6.492 6.194 5.918 5.660 5.421 5.197 4.988 4.793 4.611 4.439 4.278 4.127 3.985 3.851 3.725 13 9.986 9.394 8.853 8.358 7.904 7.487 7103 6.750 6.424 6.122 5.842 5.583 5.342 5.118 4.910 4.715 4.533 4.362 4.203 4.053 3.912 3.780 14 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.982 6.628 6.302 6.002 5.724 5.468 5.229 5.008 4.802 4.611 4.432 4.265 4.108 3.962 3.824 15 11.118 10.380 9.108 8.559 8.061 7.606 7191 6.811 6.462 6.142 5.847 5.575 5.324 5.092 4.876 4.675 4.489 4.315 4.153 4.001 3.859 16 11.652 10.838 10.106 9.447 8.851 8.313 7.824 7.379 6.974 6.604 6.265 5.954 5.668 5.405 5.162 4.938 4.730 4.536 4.357 4.189 4.033 3.887 17 12.166 11.274 10.477 9.763 9.122 8.544 8.022 75497120 6.729 6.373 6.047 5.749 5.475 5.222 4.990 4.775 4.576 4.391 4.219 4.059 3.910 18 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.702 7.250 6.840 6.467 6.128 5.818 5.534 5.273 5.033 4.812 4.608 4.419 4.243 4.080 3.928 19 13.134 12.085 11.158 10.336 9.604 8.950 8.365 78397366 6.938 6.550 6.198 5.877 5.584 5.316 5.070 4.843 4.635 4.442 4.263 4.097 3.942 20 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.963 7.469 7025 6.623 6.259 5.929 5.628 5.353 5.101 4.870 4.657 4.460 4.279 4.110 3.954 21 14.029 12.821 11.764 10.836 10.017 9.292 8.649 8.075 7.562 7102 6.687 6.312 5.973 5.665 5.384 5.127 4.891 4.675 4.476 4.292 4.121 3.963 22 14.451 13.163 12.042 11.061 10.201 9.442 8.772 8.176 7.645 7170 6.743 6.359 6.011 5.696 5.410 5.149 4.909 4.690 4.488 4.302 4.130 3.970 23 14.857 13.489 12.303 11.272 10.371 9.580 8.883 8.266 7.718 7.230 6.792 6.399 6.044 5.723 5.432 5.167 4.925 4.703 4.499 4.311 4.137 3.976 24 15.247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 7784 7.283 6.835 6.434 6.073 5.746 5.451 5.182 4.937 4.713 4.507 4.318 4.143 3.981 25 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7.843 7.330 6.873 6.464 6.097 5.766 5.467 5.195 4.948 4.721 4.514 4.323 4.147 26 15.983 14.375 13.003 11.826 10.810 9.929 9.161 8.488 7.896 7.372 6.906 6.491 6.118 5.783 5.480 5.206 4.956 4.728 4.520 4.328 4.151 3.988 27 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 4.154 3.990 28 16.663 14.898 13.406 12.137 11.051 10.116 9.307 8.602 7.984 7.441 6.961 6.534 6.152 5.810 5.502 5.223 4.970 4.739 4.528 4.335 4.157 3.992 29 16.984 15.141 13.591 12.278 11.158 10.198 9.370 8.650 8.022 7470 6.983 6.551 6.166 5.820 5.510 5.229 4.975 4.743 4.531 4337 4.159 30 17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.694 8.055 7.496 7003 6.566 6.177 5.829 5.517 5.235 4.979 4.746 4.534 4.339 4.160 3.995 40 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.951 8.244 7.634 7105 6.642 6.233 5.871 5.548 5.258 4.997 4.760 4.544 4.347 4.166 3.999 3.985 3.994 Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Req 4A Req 4B What is the project's internal rate of return? (Round your answer to the nearest whole percentage, i.e. 0.123 should be considered as 12%.) Internal rate of return %