$(1)$

Required information

$[$The following information applies to the questions displayed below.$]$

Cardinal Company is considering a five$-$year project requiring a $$2,810,000$ investment in equipment with a useful life of five years and no salvage value. The company's discount rate is $16\%.$ The project would provide net operating income in each of five years as follows:

Sales

Variable expenses

Contribution margin

Fixed expenses:

Advertising, salaries, and other

fixed out$-$of$-$pocket costs $$782,000$

Depreciation $,562,000$

Total fixed expenses

Net operating income

$$2,847,000$

$1,121,000$

$1,726,000$

Click here to view Exhibit $148-1$ and Exhibit $14$B$-2,$ to determine the appropriate discount factor$($s$)$ using table.

Required:

Which item$($s$)$ in the income statement shown above will not affect cash flows?

Note: You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.

Sales

Variable expenses

Advertising, salaries, and other fixed out$-$o pocket costs expenses

Depreciation expense