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

Table Summary: Table has $3$ columns. Column $1$ lists account names. Columns $2$ and $3$ have dollar amounts.

Sales $$ $$2,735,000$

Variable expenses $1,000,000$

Contribution margin $1,735,000$

Fixed expenses:

Advertising, salaries, and other fixed out$-$of$-$pocket costs $$735,000$

Depreciation $595,000$

Total fixed expenses $1,330,000$

Net operating income $$ $ $405,000$

Required:

Answer each question by referring to the original data unless instructed otherwise.

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

What are the project$$s annual net cash inflows?

What is the present value of the project$$s annual net cash inflows?

What is the project$$s net present value?

What is the profitability index for this project? $($Round your answer to the nearest whole percent.$)$

What is the project$$s internal rate of return to the nearest whole percent?

What is the project$$s payback period?

What is the project$$s simple rate of return for each of the five years?

If the company$$s discount rate was $16\%$ instead of $14\%,$ would you expect the project$$s net present value to be higher than, lower than, or the same as your answer to requirement $4?$ No computations are necessary.

If the equipment had a salvage value of $$300,000$ at the end of five years, would you expect the project$$s payback period to be higher than, lower than, or the same as your answer to requirement $7?$ No computations are necessary.

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 than, lower than, or the same as your answer to requirement $3?$ No computations are necessary.

If the equipment had a salvage value of $$300,000$ at the end of five years, would you expect the project$$s simple rate of return to be higher than, lower than, or the same as your answer to requirement $8?$ No computations are necessary.

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

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

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