Cardinal Company is considering a five-year project that would require a $2,955,000 investment in equipment with a useful life of five years and no salvage value. The companys discount rate is 16%. The project would provide net operating income in each of five years as follows:

Sales			$	2,871,000
Variable expenses				1,018,000
Contribution margin				1,853,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	753,000
Depreciation		591,000
Total fixed expenses				1,344,000
Net operating income			$	509,000

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?