Problem 12-17 (Algo) Net Present Value Analysis; Internal Rate of Return; Simple Rate of Return [LO12-2, LO12-3, LO12-6] 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 that would require a $6,100,000 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: Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed. out-of-pocket costs. Depreciation Total fixed expenses: $ 5,400,000 2,400,000 3,000,000 $900,000 1,220,000. 2,120,000 $880,000 Net operating income Click here to view Exhibit 12B-1 and Exhibit 12B-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 to the nearest whole percent? 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? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4A Req 48 What is the project's net present value? (Round your final answer to the nearest whole dollar amount.) Net present value Problem 12-17 (Algo) Net Present Value Analysis; Internal Rate of Return; Simple Rate of Return [LC LO12-3, LO12-6] Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division's return Investment (ROI), which has been above 24% each of the last three years. Casey is considering a capital budgeting project that require a $6,100,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company's discount 20%. The project would provide net operating income each year for five years as follows: Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation $900,000 1,220,000 $ 5,400,000 2,400,000 3,000,000 Total fixed expenses 2,120,000 Net operating income $ 880,000 Click here to view Exhibit 12B-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 to the nearest whole percent? 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? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4A Req 48 What is the project's internal rate of return? (Round your answer to the nearest whole percentage, l.e. 0.123 should be considered as 12%.) Internal rate of return: % 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 that wo require a $6,100,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company's discount rate 20%. The project would provide net operating income each year for five years as follows: Sales Variable expenses $ 5,400,000 2,400,000 3,000,000 Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation $900,000 1,220,000 Total fixed expenses Net operating income 2,120,000 $880,000 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 to the nearest whole percent? 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? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4A Req 48 What is the project's simple rate of return? (Round your answer to 1 decimal place.) Simple rate of return % Problem 12-17 (Algo) Net Present Value Analysis; Internal Rate of Return; Simple Rate of Return [LO L012-3, LO12-6] Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division's return c Investment (ROI), which has been above 24% each of the last three years. Casey is considering a capital budgeting project that v require a $6,100,000 investment in equipment with a useful life of five years and no salvage value. Pigeon Company's discount ra 20%. The project would provide net operating income each year for five years as follows: Sales. Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses $ 5,400,000 2,400,000 3,000,000 $ 900,000 1,220,000 2,120,000 $ 880,000 Net operating income Click here to view Exhibit 12B-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 to the nearest whole percent? 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? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 31 Req 4A Req 48 Would the company want Casey to pursue this investment opportunity? Yes ONO Problem 12-17 (Algo) Net Present Value Analysis; Internal Rate of Return; Simple Rate of Return [LO12-2, LO12-3, LO12-6] 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 that would require a $6,100,000 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: Sales Variable expenses Fixed expenses: out-of-pocket costs $ 5,400,000 2,400,000 3,000,000 Contribution margin Advertising, salaries, and other fixed. $ 900,000 1,220,000 Total fixed expenses 2,120,000 $880,000 Depreciation Net operating income Click here to view Exhibit 12B-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 to the nearest whole percent? 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? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4A Req 48 Would Casey be inclined to pursue this investment opportunity? O Yes ONO < Req 4A Red 40 X