Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division's return on

investment $($ROl$),$ which has been above $25\%$ each of the last three years. Derrick is considering a capital budgeting project that would

require a $$4,650,000$ investment in equipment with a useful life of five years and no salvage value. Holston Company's discount rate is

$18\%.$ The project would provide net operating income each year for five years as follows:

Sales

Variable expenses

Contribution margin

Fixed expenses:

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

pocket costs $$745,000$

Depreciation $,930,000$

$\backslash$table$[[$Total fixed expenses,$1,675,000$