Cardinal Company is considering a project that would require a $2,815,000 investment in equipment with a useful life of five years. At the end of five years, the project would terminate and the equipment would be sold for its salvage value of $500,000. The companys discount rate is 18%. The project would provide net operating income each year as follows:

Sales			$	2,865,000
Variable expenses				1,015,000
Contribution margin				1,850,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	750,000
Depreciation		463,000
Total fixed expenses				1,213,000
Net operating income			$	637,000

1. What is the present value of the projects annual net cash inflows? (Use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.) 2. What is the present value of the equipments salvage value at the end of five years? 3. What is the projects net present value? 4. What is the project profitability index for this project? 5. If the equipments salvage value was $700,000 instead of $500,000, what would be the projects simple rate of return? 6. 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? 7. If the equipments salvage value was $700,000 instead of $500,000, what would be the projects simple rate of return?