Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division$$s return on investment $($ROI$),$ which has been above $25\%$ each of the last three years. Derrick is considering a capital budgeting project requiring a $$4,700,000$ investment in equipment with a useful life of five years and no salvage value. Holston Company$$s discount rate is $19\%.$ The project would provide net operating income each year for five years as follows:

Sales $ $4,100,000$

Variable expenses $1,800,000$

Contribution margin $2,300,000$

Fixed expenses:

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

$ $735,000$

Depreciation $940,000$

Total fixed expenses $1,675,000$

Net operating income $ $625,000$