Cardinal Company is considering a five-year project that would require a $2,812,000 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		$ 2,855,000
Variable expenses		1,010,000
Contribution margin		1,845,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$ 798,000
Depreciation	562,400
Total fixed expenses		1,360,400
Net operating income		$ 484,600

Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table.

3. What is the present value of the projects annual net cash inflows?

6. What is the projects internal rate of return?

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?