Assignment Task: 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 $5,850,000 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 $5,200,000
Variable expenses 2,320,000
Contribution margin 2,880,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs $ 880,000
Depreciation 1,170,000
Total fixed expenses 2,050,000
Net operating income $830,000
Required:
Question 1: What is the project's net present value?
Question 2: What is the project's internal rate of return to the nearest whole percent?
Question 3: What is the project's simple rate of return?
Question 4:
a) Would the company want Casey to pursue this investment opportunity?
b) Would Casey be inclined to pursue this investment opportunity?
Don't think too much and get in touch with the professionals of Internal Rate of Return Assignment Help service and give wings to your academic success.
Tags: Internal Rate of Return Assignment Help, Internal Rate of Return Homework Help, Internal Rate of Return Coursework, Internal Rate of Return Solved Assignments, Net Present Value Assignment Help, Net Present Value Homework Help, Simple Rate of Return Assignment Help, Simple Rate of Return Homework Help, Investment Opportunity Assignment Help, Investment Opportunity Homework Help