Cardinal Company is considering a project that would require a $2,915,000 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 $300,000. The companys discount rate is 12%. The project would provide net operating income each year as follows:

Sales			$	2,746,000
Variable expenses				1,126,000
Contribution margin				1,620,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	615,000
Depreciation		523,000
Total fixed expenses				1,138,000
Net operating income			$	482,000

Click here to view Exhibit 11B-2, to determine the appropriate discount factor(s) using table.

Required:

What is the present value of the projects annual net cash inflows? (Round discount factor(s) to 3 decimal places and final answer to the nearest dollar amount.)

Present value

$

Cardinal Company is considering a project that would require a $2,890,000 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 companys discount rate is 12%. The project would provide net operating income each year as follows:

Sales			$	2,739,000
Variable expenses				1,100,000
Contribution margin				1,639,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	641,000
Depreciation		538,000
Total fixed expenses				1,179,000
Net operating income			$	460,000

Click here to view Exhibit 11B-1, to determine the appropriate discount factor(s) using table.

Required:

What is the present value of the equipments salvage value at the end of five years? (Round discount factor(s) to 3 decimal places and final answer to the nearest dollar amount.)

Present value

$

Cardinal Company is considering a project that would require a $2,875,000 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 $300,000. The companys discount rate is 16%. The project would provide net operating income each year as follows:

Sales			$	2,871,000
Variable expenses				1,018,000
Contribution margin				1,853,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	753,000
Depreciation		515,000
Total fixed expenses				1,268,000
Net operating income			$	585,000

Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables.

Required:

What is the projects net present value? (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.)

Net present value

$

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 companys discount rate is 18%. The project would provide net operating income each year as follows:

Sales			$	2,873,000
Variable expenses				1,019,000
Contribution margin				1,854,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	754,000
Depreciation		516,400
Total fixed expenses				1,270,400
Net operating income			$	583,600

Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables.

Required:

Cardinal Company is considering a project that would require a $2,890,000 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 companys discount rate is 12%. The project would provide net operating income each year as follows:

Sales			$	2,739,000
Variable expenses				1,100,000
Contribution margin				1,639,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	641,000
Depreciation		538,000
Total fixed expenses				1,179,000
Net operating income			$	460,000

Required:

What is the projects payback period? (Round your answer to 2 decimal places.)

Cardinal Company is considering a project that would require a $2,890,000 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 companys discount rate is 12%. The project would provide net operating income each year as follows:

Sales			$	2,739,000
Variable expenses				1,100,000
Contribution margin				1,639,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	641,000
Depreciation		538,000
Total fixed expenses				1,179,000
Net operating income			$	460,000

Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables.

Required:

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 50%. What was the projects actual net present value? (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, other intermediate calculations and final answer to the nearest whole dollar.)

Projects payback period

years

What is the project profitability index for this project? (Round discount factor(s) to 3 decimal places and final answer to 2 decimal places.)

Cardinal Company is considering a project that would require a $2,755,000 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 $300,000. The companys discount rate is 14%. The project would provide net operating income each year as follows:

Sales			$	2,859,000
Variable expenses				1,100,000
Contribution margin				1,759,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	700,000
Depreciation		491,000
Total fixed expenses				1,191,000
Net operating income			$	568,000

Required:

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 50%. What was the projects actual payback period?(Round your answer to 2 decimal places.)

Payback period

years