Derrick lverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division's retum 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 $4,120,000 investment in equipment with a useful life of five years and no salvage value. Holston Company's discount rate is 17%. The project would provide net operating income each year for five years as follows: Sales Variable expenses Contribution margin Fixed expensent Advortising, salaries, and other fixed out-of-pocket coste Depreciation Totar fixed expenses Net operating income $690,000 824,000 5486,0001,514,000 Click here to view Exhibit 128.1 and Exhibit 128-2, to determine the oppropriate discount factor(s) using tables: Required: 1. Compute the project's net present value. 2. Compute the project's simple rate of retum. 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. Complete this question by entering your answers in the tabs below. Req 1 Compute the project's net present value. (Round your final answer to the nearest whole dolli Net present value Complete this question by entering your answers in the tabs below. Compute the project's simple rate of return. (Round your answer to 1 decimal place i.e. 12.3%.) Simple rate of retum % Complete this question by entering your answers in the tabs below. Req 3A Req) 3B Would Derrick be inclined to pursue this investment opportunity? Complete this question by entering your answers in the tabs below. Would the company want Derrick to pursue this investment opportunity? Derrick lverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division's retum 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 $4,120,000 investment in equipment with a useful life of five years and no salvage value. Holston Company's discount rate is 17%. The project would provide net operating income each year for five years as follows: Sales Variable expenses Contribution margin Fixed expensent Advortising, salaries, and other fixed out-of-pocket coste Depreciation Totar fixed expenses Net operating income $690,000 824,000 5486,0001,514,000 Click here to view Exhibit 128.1 and Exhibit 128-2, to determine the oppropriate discount factor(s) using tables: Required: 1. Compute the project's net present value. 2. Compute the project's simple rate of retum. 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. Complete this question by entering your answers in the tabs below. Req 1 Compute the project's net present value. (Round your final answer to the nearest whole dolli Net present value Complete this question by entering your answers in the tabs below. Compute the project's simple rate of return. (Round your answer to 1 decimal place i.e. 12.3%.) Simple rate of retum % Complete this question by entering your answers in the tabs below. Req 3A Req) 3B Would Derrick be inclined to pursue this investment opportunity? Complete this question by entering your answers in the tabs below. Would the company want Derrick to pursue this investment opportunity
