A Company is considering a five-year project that would require a $2,975,000 investment in equipment with a useful life of five years and no salvage value. The companys discount rate is 14%. The project would provide net operating income in each of five years as follows:

Sales $ 2,735,000Variable expenses 1,000,000Contribution margin 1,735,000Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs$ 735,000 Depreciation595,000 Total fixed expenses 1,330,000Net operating income $ 405,000

5. What is the profitability index for this project? (Round your answer to 2 decimal places.)

6. What is the projects internal rate of return?

7. What is the projects payback period?

8. What is the projects simple rate of return for each of the five years?

9. If the companys discount rate was 16% instead of 14%, would you expect the project's net present value to be higher, lower, or the same?

10. If the equipment had a salvage value of $300,000 at the end of five years, would you expect the projects payback period to be higher, lower, or the same?

11. If the equipment had a salvage value of $300,000 at the end of five years, would you expect the project's net present value to be higher, lower, or the same?

12. If the equipment had a salvage value of $300,000 at the end of five years, would you expect the projects simple rate of return to be higher, lower, or the same?

13. Assume a postaudit showed that all estimates (including total sales) were exactly correct except for the variable expense ratio, which actually turned out to be 45%. What was the projects actual net present value?

14. Assume a postaudit showed that all estimates (including total sales) were exactly correct except for the variable expense ratio, which actually turned out to be 45%. What was the projects actual payback period?

15. Assume a postaudit showed that all estimates (including total sales) were exactly correct except for the variable expense ratio, which actually turned out to be 45%. What was the projects actual simple rate of return?