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
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: $ 2,851,600 1,150, eee 1,701,00 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, eee 478,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table 6. What is the project's internal rate of return? Project's internal rate of retum % 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, eee 1,150, eee 1,701,000 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,eee 1,223,000 $ 478,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table. 7. What is the project's payback period? (Round your answer to 2 decimal places.) Project's payback period years 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: $ 2,851,000 1,150,000 1,701,000 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, eee 1,223,eee $ 478,eee Click here to view Exhibit 148-1 and Exhibit 14B-2. to determine the appropriate discount factor(s) using table 8. What is the project's simple rate of return for each of the five years? (Round your answer to 2 decimal places.) Simple rate of retum %

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

Case And Problem Materials In Management Accounting

Authors: Tony Brabazon And Tony ODea

2nd Edition

1412024315, 978-1412024310

More Books

Students also viewed these Accounting questions

Question

Complete the Motivation to Lead Scale on p.

Answered: 1 week ago