Simmons Company is a merchandiser with multiple store locations. One of its store managers is considering a shift in her store's

product mix in anticipation of a strengthening economy. Her store would invest $$800,000$ in more expensive merchandise $($an

increase in its working capital$)$ with the expectation that it would increase annual sales and variable expenses by $$400,000$ and

$$250,000,$ respectively for three years. At the end of the three$-$year period, the store manager believes that the economic surge will

subside; therefore, she will release the additional investment in working capital. The store manager's pay raises are largely determined

by her store's return on investment $($ROI$),$ which has exceeded $22\%$ each of the last three years.

Click here to view Exhibit $14$B$-1$ and Exhibit $14$B$-2$ to determine the appropriate discount factor$($s$)$ using table. $($Use appropriate

factor$($s$)$ from the tables provided.$)$

Required:

Assuming the company's discount rate is $16\%,$ calculate the net present value of the store manager's investment opportunity.

Calculate the annual margin, turnover, and return on investment $($ROI$)$ provided by the store manager's investment opportunity.

Assuming that the company's minimum required rate of return is $16\%,$ calculate the residual income earned by the store manager's

investment opportunity for each of years $1$ through $3.$

Do you think the store manager would choose to pursue this investment opportunity? Do you think the company would want the

store manager to pursue it$?$

Complete this question by entering your answers in the tabs below.

Calculate the annual margin, turnover, and return on investment $($ROI$)$ provided by the store manager's investment

opportunity. $($Round your answers to $2$ decimal places.$)$