Exercise $14-9($Algo$)$ Net Present Value Analysis and Simple Rate of Return $[$LO$14-2,$ LO$14-6]$

Derrick Iverson is a divisional manager for Holston Company. Derrick is considering a capital budgeting project that would require a $\backslash (\backslash$$ $4,160,000\backslash )$ investment in equipment with a useful life of five years and no salvage value. Holston Company's discount rate is $\backslash (19\backslash \%\backslash ).$ The project would provide net operating income each year for five years as follows:

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

Required:

$1.$ Compute the project's net present value.

$2.$ Compute the project's simple rate of return.

$3$a$.$ Looking at the answer to $1.$ net present value, would the company want Derrick to pursue this investment opportunity?

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

Compute the project's net present value. $($Round your final answer to the nearest whole dollar amount.$)$

Exercise $14-9($Algo$)$ Net Present Value Analysis and Simple Rate of Return $[$LO$14-2,$ LO$14-6]$

Derrick Iverson is a divisional manager for Holston Company. Derrick is considering a capital budgeting project that would require a $\backslash (\backslash$$ $4,160,000\backslash )$ investment in equipment with a useful life of five years and no salvage value. Holston Company's discount rate is $19\backslash \%.$ The project would provide net operating income each year for five years as follows:

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

Required:

$1.$ Compute the project's net present value.

$2.$ Compute the project's simple rate of return.

$3$a$.$ Looking at the answer to $1.$ net present value, would the company want Derrick to pursue this investment opportunity?

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

Compute the project's simple rate of return. $($Round your answer to $1$ decimal place i$.$e$.0\mathrm{.}123$ should be considered as $12\mathrm{.}3\backslash \%.)$

Exercise $14-9($Algo$)$ Net Present Value Analysis and Simple Rate of Return $[$LO$14-2,$ LO$14-6]$

Derrick Iverson is a divisional manager for Holston Company. Derrick is considering a capital budgeting project that would require a $\backslash (\backslash$$ $4,160,000\backslash )$ investment in equipment with a useful life of five years and no salvage value. Holston Company's discount rate is $19\backslash \%.$ The project would provide net operating income each year for five years as follows:

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

Required:

$1.$ Compute the project's net present value.

$2.$ Compute the project's simple rate of return.

$3$a$.$ Looking at the answer to $1.$ net present value, would the company want Derrick to pursue this investment opportunity?

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

Req $1$

Would the company want Derrick to pursue this investment opportunity?

Yes