1) assume a postaudit showed that all estimates were exactly correct except dor the variable expense ratio, which actually turned out to he 45%. what was the projects actual payback period ?

2) assume postaudit showed that all estimates 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 ?

*Both estimates are including total sales.

Cardinal Company is considering a project that would require a $2,975,000 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 company's discount rate is 14%. The project would provide net operating income each year as follows: Sales Variable expenses $ 2,735,000 1,000,000 1,735,000 Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation $ 735,000 535,000 Total fixed expenses 1,270,000 Net operating income $ 465,000