Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cardinal Company is considering a five-year project that would require a $2,765,000 investment in equipment with a useful life of five years and no salvage

image text in transcribed
image text in transcribed
Cardinal Company is considering a five-year project that would require a $2,765,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 14%. The project would provide net operating income in each of five years as follows: $ 2,851.ee 1,150,000 1,781,800 Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses Net operating income $ 670,000 553, 600 1,223,000 478,000 Click here to view Exhibit 148-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table 4. What is the project's net present value? (Round final answer to the nearest whole dollar amount.) Not prosent value Cardinal Company is considering a five-year project that would require a $2765,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 14%. The project would provide net operating income in each of five years as follows: $ 2,851,000 1,150,000 1,701, Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses Net operating income $ 670,eee 553, eee 1,223,00 $ 478,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table v 5. What is the profitability index for this project? (Round your answer to 2 decimal places.) Profitability index

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Foundations Of Managerial Accounting

Authors: Dr. Susan Galbreath

1st Edition

0390786276, 978-0390786272

More Books

Students also viewed these Accounting questions

Question

Question 7 of 10

Answered: 1 week ago