Derrick Iverson is a divisional manager for Holston Company. HIs annual pay ralses are largely determined by his division's

return on investment $($ROI$),$ which has been above $20\%$ each of the last three years. Derrick is considering a capital budgeting

project that would require a $$3,800,000$ investment in equipment with a useful life of five years and no salvage value. Holston

Company's discount rate is $16\%.$ The project would provide net operating income each year for five years as follows:

Click here to vlew Exhiblt $12$B$-1$ and Exhiblt $12$B$-2,$ to determine the approprlate discount factor$($s$)$ using tables.

Required:

Compute the project's net present value.

Compute the project's simple rate of return.

$3$a$.$ Would the company want Derrick to pursue this investment opportunity?

$3$b$.$ Would Derrick be inclined to pursue this investment opportunity?

Complete this question by entering your answers in the tabs below.

Req $1$

Req $2$

Req $3A$

Req $3B$

Compute the project's net present value. $($Round your final answer to the nearest whole dollar amount.$)$

Net present value

Req $1$