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In: AccountingDerrick Iverson is a divisional manager for Holston Company. Hisannual pay raises are largely determined...Derrick Iverson is a divisional manager for Holston Company. Hisannual pay raises are largely determined by his division’s returnon investment (ROI), which has been above 20% each of the lastthree years. Derrick is considering a capital budgeting projectthat would require a $3,080,000 investment in equipment with auseful life of five years and no salvage value. Holston Company’sdiscount rate is 17%. The project would provide net operatingincome each year for five years as follows:Sales$2,700,000Variable expenses1,100,000Contribution margin1,600,000Fixed expenses:Advertising, salaries, and other fixedout-of-pocket costs$620,000Depreciation616,000Total fixed expenses1,236,000Net operating income$364,000Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determinethe appropriate discount factor(s) using tables.Required:1. Compute the project's net present value.2. Compute the project's simple rate of return.3a. Would the company want Derrick to pursue this investmentopportunity?3b. Would Derrick be inclined to pursue this investmentopportunity?