[Exhibit 14B-1 below]
[Exhibit 14B- below]
Exercise 14-9 (Algo) Net Present Value Analysis and Simple Rate of Return (L014-2, L014-6) 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 $3,080,000 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: $2,700,000 1,200,000 1,600,000 Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses Net operating income $ 620,000 616,000 1,236,000 $364,000 Click here to view Exhibit 148-1 and Exhibit 148-2, 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 30. 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 tahe hain EHT 148-1 Patent of the INC . 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Pret of an annuity of Art 790 7100 Po 75 103 150 16 17 199 200 201 22 21 20 25 1 0962 052 093 09350920 090 0.909 0.01 0.893 0.95 0.77 0.870 01620155 0347 0340 009200820035 0.005 0.000 2 1080 1830 1783 1359 136 13 1690 1663 1647 1626 160515851568 157 158 15091492 1-04 145740 3 2775 2773 2.673 2521 2577 2531 247 2444 28022312322222246 2210 2014 2.300 2100 2014 2012 2011 1901 1952 4 2630 3.506 3.455 3337 3312 3.200 31701102 3037 2914 2.9 2.855 2.70 2.732.090 2600 2.500 2.500 2.494 203 2004 2.362 5 4500 2.990 7090 3791 3000 300535171003152 1274 3199 3071058 2.991 29252861 2003 2.75 2009 5 52025070 290 4787 4023 4.355 421 4m 3998 192734 365 3500 3.490 3001328 1245 3167 3092 3020 2951 6002 5736 5502 53095206 5083 4.868 47 454 423 4280404009392238523.706 2005 2004 2416 227 222 1551 3 1730 640 5707 5035 5205569479946394437 43444207 0733.954 3.807 3726 369 351814213729 2008 5.802 6.555 6247 5.995 57505537 528 532906477240014451 4300 160 10 m 7722 4.071 1905 1706 1673 164 1659 2350 2024 670 6.15 3.809 5.650542652953019334659 4.494 43394192 4054302317992682157 . 750 2.300 77 7400 700 6.305 0.495 6.207 5938 567 5.453 5234 5029 4300 46564436 4.327 47 2005 2902 3776 2650 105 10 1234 7536 7361 0.05 6.692 6194 5985600 5421 5197 198 47934611 400942734121 1905 3951 1725 9.9509394 0.550 35 7904 6.750 6.424 6122 5342 5530 53425 4010715 4513424200 4053 1912 3780 995639999255 3745 8266 2716 736789026623 612 6002 572456852295.000 2.0024611443242054100 15 10:30 972 2.9522624 9.00 2.559 101 7606 7190 6811 6,652 6542 5.347 5575 5.374 5092 376 407 446925 4153 4001 1950 55 116521101 10106 9447 LS 78244 23795.9746062655954560 5.40551522908 4730153043579 12.16 27490.69703 40337 9122 0541 3022759712067295373 6047 5740 545 222 4990 477545764.39142190533910 650 000 002990500372 2.756 5.2017702 72506540 6.457 6128 5.105.534 5 2735033 48124608 449 04000 320 04 2018 158 10236 9.500 1950 1365 78392306 6938 65506188537755545.3165070046544424200 40973942 20 SO 200000594 909 357963 7000 7025 6623 6.250 5.9295628 5.1535301 470 4657 445042290 4029 1221 1764 03 10179292 1549075 75522102 6.601 6.125.973586553545127 40946755 292401 2983 1:161201210061 10.2019.442 872 10 76457 6.70 259 60 5.60 540 550 4000 4600 468 102400 23 SUNT 489211212101500 1970 20027 72306792399 57235425967 5247179012550160105299707 492547034499 41 24 2976 3041704220351350434607357450515124937 23 40 15.022 4270054906750823 4507 43 3. 907402786 233067464 0975754575195 447214543334 1955 2 1517510001320103102929 9101 78062290664916716 570 5.400 5200457224520 412151 27 10 10 5 18010915 19.02) 9.237 8.58 7901740959053351365790 5.40252154964 473452444154 29 2 16060606 07 T01 10.15 1990 9305502217441 690 554 6152 5.0 5.5022 470 47294528415451 2 549227 10109.370 650 022 70693655680038205.5105229954 2.992 30 1129275 12000 11258 219.42769055 7400100355672 1410 1990 5.89 557 5215 4.9291746531 439 40 050602172182107579.770 1951 1247647 3005 66126223585258490747505016 100 RSS RS
