Q3 in %

1st 3 questions

Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division's return on investment (ROO), which has been above 24% each of the last three years. Casey is considering a capital budgeting project that would require a $4,300,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company's discount rate is 20\%. The project would provide net operating income each year for five years as follows: Click here to view Exhibit 781 and Exhibit 782, to determine the appropriate discount factor(s) using tables. Required: 1. What is the project's net present value? 2. What is the project's internal rate of return to the nearest whole percent? 3. What is the project's simple rate of return? 4-a. Would the company want Casey to pursue this investment opportunity? 4-b. Would Cosey be inclined to pursue this investment opportunity? EXHIBIT 7B-1 Present Value of \$1: ((1+r))41 FKIIIII 7B2 Present Value of an Aneaity of $1 in Arrears r1[1((1+r))F1]