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What is the projects simple rate of return? Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by
What is the projects simple rate of return? Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division's return on investment(ROI), which has been above 22% each of the last three years. Casey is considering a capital budgeting project that would require a $3,900,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company's discount rate is 18%. The project would provide net operating income each year for five years as follows: Sales Variable expenses Contribution margin 3,800,000 1,760.000 2,040.000 Pixed expenses Advertising, salarles, and other fixed out-of-pocket costi Depreciation 740,000 Total fixed expenses Net operating income 520,000 S$20,000
What is the projects simple rate of return?
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