1. Cardinal Company is considering a project that would require a $2,805,000 investment in equipment with a useful life of five years. At the end of five years, the project would terminate and the equipment would be sold for its salvage value of $400,000. The companys discount rate is 14%. The project would provide net operating income each year as follows:

Sales $ 2,741,000

Variable expenses 1,125,000

Contribution margin 1,616,000

Fixed expenses:

Advertising, salaries, and other

fixed out-of-pocket costs $ 642,000

Depreciation 481,000

Total fixed expenses 1,123,000

Net operating income $ 493,000

Required:

What are the projects annual net cash inflows?

Annual net cash inflow $

2. Cardinal Company is considering a project that would require a $2,725,000 investment in equipment with a useful life of five years. At the end of five years, the project would terminate and the equipment would be sold for its salvage value of $400,000. The companys discount rate is 14%. The project would provide net operating income each year as follows:

Sales $ 2,867,000

Variable expenses 1,125,000

Contribution margin 1,742,000

Fixed expenses:

Advertising, salaries, and other

fixed out-of-pocket costs $ 706,000

Depreciation 465,000

Total fixed expenses 1,171,000

Net operating income $ 571,000

Click here to view Exhibit 11B-2, to determine the appropriate discount factor(s) using table.

Required:

What is the present value of the projects annual net cash inflows? (Round discount factor(s) to 3 decimal places and final answer to the nearest dollar amount.)

Present value $

3. Cardinal Company is considering a project that would require a $2,745,000 investment in equipment with a useful life of five years. At the end of five years, the project would terminate and the equipment would be sold for its salvage value of $500,000. The companys discount rate is 18%. The project would provide net operating income each year as follows:

Sales $ 2,857,000

Variable expenses 1,011,000

Contribution margin 1,846,000

Fixed expenses:

Advertising, salaries, and other

fixed out-of-pocket costs $ 799,000

Depreciation 449,000

Total fixed expenses 1,248,000

Net operating income $ 598,000

Click here to view Exhibit 11B-1, to determine the appropriate discount factor(s) using table.

Required:

What is the present value of the equipments salvage value at the end of five years? (Round discount factor(s) to 3 decimal places and final answer to the nearest dollar amount.)

Present value $

4. Cardinal Company is considering a project that would require a $2,765,000 investment in equipment with a useful life of five years. At the end of five years, the project would terminate and the equipment would be sold for its salvage value of $200,000. The companys discount rate is 12%. The project would provide net operating income each year as follows:

Sales $ 2,861,000

Variable expenses 1,101,000

Contribution margin 1,760,000

Fixed expenses:

Advertising, salaries, and other

fixed out-of-pocket costs $ 705,000

Depreciation 513,000

Total fixed expenses 1,218,000

Net operating income $ 542,000

Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables.

Required:

What is the projects net present value? (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.)

Net present value $

5. Cardinal Company is considering a project that would require a $2,765,000 investment in equipment with a useful life of five years. At the end of five years, the project would terminate and the equipment would be sold for its salvage value of $300,000. The companys discount rate is 14%. The project would provide net operating income each year as follows:

Sales $ 2,851,000

Variable expenses 1,150,000

Contribution margin 1,701,000

Fixed expenses:

Advertising, salaries, and other

fixed out-of-pocket costs $ 670,000

Depreciation 493,000

Total fixed expenses 1,163,000

Net operating income $ 538,000

Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables.

Required:

What is the project profitability index for this project? (Round discount factor(s) to 3 decimal places and final answer to 2 decimal places.)

Project profitability index

6. Cardinal Company is considering a project that would require a $2,815,000 investment in equipment with a useful life of five years. At the end of five years, the project would terminate and the equipment would be sold for its salvage value of $500,000. The companys discount rate is 18%. The project would provide net operating income each year as follows:

Sales $ 2,865,000

Variable expenses 1,015,000

Contribution margin 1,850,000

Fixed expenses:

Advertising, salaries, and other

fixed out-of-pocket costs $ 750,000

Depreciation 463,000

Total fixed expenses 1,213,000

Net operating income $ 637,000

Required:

What is the projects payback period? (Round your answer to 2 decimal places.)

Projects payback period years