Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by

Question:

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 20% each of the last three years. Casey is considering a project that would require a $ 3,500,000 investment in equipment with a useful life of five years and no . Pigeon Company€™s is 16%. The project would provide net operating income each year for five years as follows:

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. Would the company want Casey to pursue this investment opportunity? Would Casey be inclined to pursue this investment opportunity?Explain.

Net Present Value
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