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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 $3,050,000 investment in equipment with auseful life of five years and no salvage value. Holston Company’sdiscount rate is 16%. The project would provide net operatingincome each year for five years as follows: Sales $ 2,600,000Variable expenses 1,050,000 Contribution margin 1,550,000 Fixedexpenses: Advertising, salaries, and other fixed out-of-pocketcosts $ 600,000 Depreciation 610,000 Total fixed expenses 1,210,000Net operating income $ 340,000 Click here to view Exhibit 12B-1 andExhibit 12B-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. 3a. Would thecompany want Derrick to pursue this investment opportunity? 3b.Would Derrick be inclined to pursue this investmentopportunity?