Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division$$s return on investment $($ROI$),$ which has been above $21\%$ each of the last three years. Casey is considering a capital budgeting project that would require a $$3,700,000$ investment in equipment with a useful life of five years and no salvage value. Pigeon Company$$s discount rate is $17\%.$ The project would provide net operating income each year for five years as follows:

Sales $ $3,600,000$

Variable expenses $1,680,000$

Contribution margin $1,920,000$

Fixed expenses:

Advertising, salaries, and other fixed out$-$of$-$pocket costs $ $720,000$

Depreciation $740,000$

Total fixed expenses $1,460,000$

Net operating income $ $460,000$

Click here to view Exhibit $7$B$-1$ and Exhibit $7$B$-2,$ 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?