Problem $14-17($Algo$)$ Net Present Value Analysis; Internal Rate of Return; Simple Rate of Return $[$LO$14-2,$

LO$14-3,$ LO$14-6]$

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 $24\%$ each of the last three years. Casey is considering a capital budgeting project requiring a

$$4,450,000$ investment in equipment with a useful life of five years and no salvage value. Pigeon Company's discount rate is $20\%.$ 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:

What is the project's net present value?

What is the project's internal rate of return to the nearest whole percent?

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?