Natalie Kane is a regional manager for Flexsteel Industries which manufactures furniture. Her annual salary increases are based on her regions return on investment (ROI), which has been above 20% for the past few years. Natalie is analyzing a capital budgeting project that would require a $3,800,000 investment in equipment with a useful life of five years and no salvage value. Flexsteel Industries' discount rate is 16%. The project would provide net operating income each year for five years as follows:

Sales			$	3,200,000
Variable expenses				1,350,000
Contribution margin				1,850,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	670,000
Depreciation		760,000
Total fixed expenses				1,430,000
Net operating income			$	420,000

Click here to view Exhibit 12B-1 and Exhibit 12B-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.

3a. Would the company want Natalie to pursue this investment opportunity?

3b. Would Natalie be inclined to pursue this investment opportunity?