Cardinal Company is considering a project that would require a $2,782,000 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 $200,000. The company's discount rate is 18%. The project would provide net operating income each year as follows: Sales Variable expenses $2,873,000 1,019,000 Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation 1,854,000 $754,000 516,400 Total fixed expenses 1,270,400 Net operating income $583,600