Cardinal Company is considering a five-year project that would require a $2,750,000 investment in equipment with a useful life of five years and no salvage value. The companys discount rate is 18%. The project would provide net operating income in each of five years as follows:

Sales		$ 2,849,000
Variable expenses		1,122,000
Contribution margin		1,727,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$ 752,000
Depreciation	550,000
Total fixed expenses		1,302,000
Net operating income		$ 425,000

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

5. What is the profitability index for this project?