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 20% each of the last three years. Casey is considering a capital budgeting project that would require a $3,500,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company's discount rate is 16%. The project would provide net operating income each year for five years as follows: $ 3,400,000 1,600,000 1,800,000 Sales Variable expenses Contribution margin Fixed expenses! Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses Net operating income See.ee 700.000 1,400,000 480,000 $ Click here to view Exhibit 7.1 and Exhibit7B-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. Reg 2 Reg 4 Reg 1 Reg 3 Reg 48 What is the project's net present value? (Round your final answer to the nearest whole dollar amount.) Net present value Req2 > 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 20% each of the last three years. Casey is considering a capital budgeting project that would require a $3,500,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company's discount rate is 16%. The project would provide net operating income each year for five years as follows: $ 3,400,000 1,600,000 1,800,000 Sales Variable expenses Contribution margin Fixed expenses! Advertising. salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses Net operating income $700,000 700,000 1,400,000 400,000 Click here to view Exhibit 7B-1 and Exhibit 7B-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. Reg 4A Req 48 Req3 Reg 1 Reg 2 What is the projects internal rate of return? (Round your answer to whole decimal place L., 0.123 should be considered as 12% ) Internal rate of return Req3 > Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his divisio investment (ROI), which has been above 20% each of the last three years. Casey is considering a capital budgeting pr require a $3,500,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company 16%. The project would provide net operating income each year for five years as follows: $ 3,400,000 1,600,000 1,800,000 Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses Net operating income $ 700,000 700,000 1,400.000 400,000 nces Click here to view Exhibit 78:1 and Exhibit 7B-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? 4-6. 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 Would the company want Casey to pursue this investment opportunity? Yes ONO Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his di investment (ROI), which has been above 20% each of the last three years. Casey is considering a capital budgetir require a $3,500,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Comp 16%. The project would provide net operating income each year for five years as follows: $ 3,400,000 1,600,000 1,800,000 Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses Net operating income $ 700,000 700,000 1,400,000 400,000 ences Click here to view Exhibit 7B-1 and Exhibit 7B-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. Reg 1 Req 2 Reg 3 Req 4A Req 4B Would Casey be inclined to pursue this investment opportunity? OYes O No
