Hos De purchased? the company requires a simple EXERCISE 13-9 Net Pres Derrick Iverson is a divi determined by his divi last three years. Derrick: investment in equipme ny's discount rate years as follows: Net Present Value Analysis and Simple Rate of Return (L013-2, L013-6) is a divisional manager for Holston Company. His annual pay raises are largely his division's return on investment (ROI), which has been above 20% each of the Derrick is considering a capital budgeting project that would require a $3,000,000 equipment with a useful life of five years and no salvage value. Holston Compa unt rate is 15%. The project would provide net operating income each year for five $2,500,000 1,000,000 1,500,000 Sales ....... Variable expenses .... Contribution margin ..... Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses .......... Net operating income ...... $600,000 600,000 1,200,000 $ 300,000 Required: 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