Fixed expenses: Advertising, salaries, and other fixed $600,000 out-of-pocket costs . . . . . . . . . 600,000 Depreciation . ... . . . . . . . .... 1,200,000 Total fixed expenses . .... $ 300,000 Net operating income . . . . . Required: m 1. Compute the project's net present value. 2. Compute the project's simple rate of return. 3 . Would the company want Derrick to pursue this investment opportunity? Would Derrick be inclined to pursue this investment opportunity? Explain. EXERCISE 8-10 Basic Net Present Value Analysis [LO 8-2] Kathy Myers frequently purchases stocks and bonds, but she is uncertain how to determine the rate of return that she is earning. For example, three years ago she paid $13,000 for 200 shares of Malti Company's common stock. She received a $420 cash dividend on the stock at the end of each year for three years. At the end of three years, she sold the stock for $16,000. Kathy would like to earn a return of at least 14% on all of her investments. She is not sure whether the Malti Company stock provided a 14% return and would like some help with the necessary computations. Required: Using the net present value method, determine whether or not the Malti Company stock provided a 14% return. Round all computations to the nearest whole dollar. EXERCISE 8-11 Preference Ranking of Investment Projects [LO 8-5] Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows