Cardinal Company is considering a project that would require a $2,792,000 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 $400,000. The companys discount rate is 14%. The project would provide net operating income each year as follows:

Sales

$

2,875,000

Variable expenses

1,124,000

Contribution margin

1,751,000

Fixed expenses:

Advertising, salaries, and other fixed out-of-pocket costs

$

721,000

Depreciation

478,400

Total fixed expenses

1,199,400

Net operating income

$

551,600

5.

What is the projects net present value?

6.

What is the project profitability index for this project?

7.

What is the projects payback period?

8.	What is the projects simple rate of return for each of the five years?