Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his divisions 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 $4,160,000 investment in equipment with a useful life of five years and no salvage value. Holston Companys discount rate is 19%. The project would provide net operating income each year for five years as follows:

Sales			$	3,700,000
Variable expenses				1,600,000
Contribution margin				2,100,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	710,000
Depreciation		832,000
Total fixed expenses				1,542,000
Net operating income			$	558,000

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:

1. Compute the project's net present value.

2. Compute the project's simple rate of return.

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

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

investment (ROI), which has been above 20% each of the last three years. Derrick is considering a capital budgeting project that would require a $4,160,000 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 Variable expenses Contribution margin Fixed expenses: $3,700,000 1,600,000 2,100,000 Advertising, salaries, and other fixed out-of-pocket costs Depreciation $ 710,000 832,000 Total fixed expenses 1,542,000 $ 558,000 Net operating income Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables Required 1. Compute the project's net present value 2. Compute the project's simple rate of return. 3a. Would the company want Derrick to pursue this investment opportunity? 3b. 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 Req1 Req 2