Derrick Iverson is a divisional manager for Holston Company. His annual pay raises are largely determined by his division’s return on investment (ROI), which has been above 20% each of the last three years. Derrick is considering a capital budgeting project that would require a $3,000,000 investment in equipment with a useful life of five years and no salvage value. Holston Company’s discount rate is 15%. The project would provide net operating income each year for five years as follows:

Use the information given below, to compare the cost of operating two different vehicles for one month (4 weeks) you are considering two different cars. you drive to work, a 20 mile round trip, five days a week. gasoline costs you $1.50 per gallon car agets 28 miles per gallon, would have $300 a year in maintenance costs, and would cost you $1,500 per year to insure car b gets 19 miles per gallon, would have $500 a year in maintenance costs, and would cost you $1,000 per year to insure costs car a car b gas cost per month insurance cost per month maintenance cost per month $ total cost per month