Question: can someone can help me with this problem. Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by
can someone can help me with this problem.

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 23% each of the last three years, Casey is considering a capital budgeting project that would require a $4,100,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company's discount rate is 19%. The project would provide net operating income each year for five years as follows: Sales $ 4,000,000 Variable expenses 1,840,060 Contribution margin 2, 160,090 Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs $ 760,000 Depreciation 820, 000 Total fixed expenses 1,580,000 Net operating income 580,000 Click here to view Exhibit 128-1 and Exhibit 128-2, 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? 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 Casey be inclined to pursue this investment opportunity
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
