Sales Variable expenses $3,400,000 1,600,000 1,800,000 Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation .. Total fixed expenses Net operating income $700,000 700,000 1,400,000 $ 400,000
Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely determined by his division’s
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. Would the company want Casey to pursue this investment opportunity? Would Casey be inclined to pursue this investment opportunity? Explain.
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