Cardinal Company is considering a five-year project that would require a $2,805,000 investment in equipment with a useful life of five years and no salvage value. The companys discount rate is 14%. The project would provide net operating income in each of five years as follows:

Sales $ 2,741,000

Variable expenses 1,125,000

Contribution margin 1,616,000

Fixed expenses:

Advertising, salaries, and

other fixed out-of-pocket costs $ 642,000

Depreciation 561,000

Total fixed expenses 1,203,000

Net operating income $ 413,000

1-a.What are the projects annual net cash inflows?

1-b. What is the present value of the projects annual net cash inflows?

2. What is the projects net present value?

3. What is the project profitability index for this project?

4. What is the projects internal rate of return?

5. What is the projects payback period?

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

7. 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?

8. 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?

9. 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?