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 $20\%$ each of the last three years. Derrick is considering a capital budgeting project that would require a $$3,560,000$ 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:

sales: $$3,000,000$

Variable Expenses $$1,250,000$

Contribution Margin: $$1,750,000$

Fixed Expenses:

fixed out o fpocket costs: $$650,000$

Depreciation: $$712,000$

Total Fixed expenses: $$1,362,000$

NOI: $$388,000$

$1.$ Find project's net present value

$2.$ Find project's simple rate of retun

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

$3$b$.$ Would Derrick be inclined to persue this investement oppoertunity?