PROBLEM 11-13A Net Present Value Analysis: Simple Rate of Return (LOT-2, 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 capital budgeting project that would require a $3,500,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company's discount rate is 16%. The project would provide net operating income each year for five years as follows: .... Sales .. $3,400,000 Variable expenses ....... 1,600,000 Contribution margin ... 1,800,000 Fixed expenses: Advertising, salaries, and other fixed logo out-of-pocket costs.. $700,000 000121 Depreciation 700,000 She bartup Total fixed expenses .. 1,400,000 Net operating income $ 400,000 biolo Ole Required: What is the project's net present value? 2. What is the project's simple rate of return? 3. Would the company want Casey to pursue this investment opportunity? Would Casey be inclined to pursue this investment opportunity? Explain