1. What are the projects annual net cash inflows?

2. What is the present value of the projects annual net cash inflows? (Use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.)

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 payback period?

7. What is the projects simple rate of return for each of the five years?

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 $500,000. The company's discount rate is 18%. The project would provide net operating income each year as follows: Sales Variable expenses $2,865,000 1,015,000 1,850,000 Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs $750,000 463,000 Total fixed expenses 1,213,000 Net operating income $ 637,000