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

Thanks for the help!

1.What is the projects simple rate of return for each of the five years? (Answer in %)

2. If the equipments salvage value was $500,000 instead of $300,000, what would be the projects simple rate of return?

3. 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?

4.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?

5.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 simple rate of return?