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 $400,000. The companys discount rate is 16%. The project would provide net operating income each year as follows:

Sales			$	2,863,000
Variable expenses				1,014,000
Contribution margin				1,849,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	781,000
Depreciation		483,000
Total fixed expenses				1,264,000
Net operating income			$	585,000

1-What are the projects annual net cash inflows?

2-What is the present value of the projects annual net cash inflows?

3- what is the present value of the equipments salvage value at the end of five years?

4- What is the projects net present value?

5-What is the project profitability index for this project?

6-What is the projects simple rate of return for each of the five years?

7-If the equipments salvage value was $600,000 instead of $400,000, what would be the projects simple rate of return?

8-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 net present value?

9-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 payback period?

10-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?