Cardinal Company is considering a five$-$year project requiring a $$2,915,000$ investment in equipment with a useful life of five years and no salvage value. The company$$s discount rate is $12\%.$ The project would provide net operating income in each of five years 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 $583,000$

Total fixed expenses $1,198,000$

Net operating income $ $422,000$

Click here to view Exhibit $14$B$-1$ and Exhibit $14$B$-2,$ to determine the appro$1.$ Which item$($s$)$ in the income statement shown above will not affect cas$2.$ What are the project$$s annual net cash inflows?

$3.$ What is the present value of the project$$s

$4.$ What is the project$$s net present value?

$5.$ What is the profitability index for this project?

$6.$ What is the project$$s internal rate of return?

$7.$ What is the project$$s payback period?

$8.$ What is the project$$s simple rate of return for each of the five years?

$9.$ If the company$$s discount rate was $14\%$ instead of $12\%,$ would you expect the project's net present value to be higher, lower, or the same?

$10.$ If the equipment had a salvage value of $$300,000$ at the end of five years, would you expect the project$$s payback period to be higher, lower, or the same?

$11.$ If the equipment had a salvage value of $$300,000$ at the end of five years, would you expect the project's net present value to be higher, lower, or the same?

$12.$ If the equipment had a salvage value of $$300,000$ at the end of five years, would you expect the project$$s simple rate of return to be higher, lower, or the same?

$13.$ Assume a postaudit showed all estimates $($including total sales$)$ were exactly correct except for the variable expense ratio, which actually turned out to be $50\%.$ What was the project$$s actual net present value?

$14.$ Assume a postaudit showed all estimates $($including total sales$)$ were exactly correct except for the variable expense ratio, which actually turned out to be $50\%.$ What was the project$$s actual payback period?