Cardinal Company is considering a five-year project that would require a $2,945,000 investment in equipment with a useful life of five years and no salvage value. The companys discount rate is 18%. The project would provide net operating income in each of five years as follows:

Sales				$	2,873,000
Variable expenses					1,019,000
Contribution margin					1,854,000
Fixed expenses:
Advertising, salaries, and other out-of-pocket costs	$	754,000
Depreciation		589,000
Total fixed expenses					1,343,000
Net operating income				$	511,000

(Hint: Use Microsoft Excel to calculate the discount factor(s).)

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

2-b. What is the present value of the projects annual net cash inflows? (Round discount factor to5 decimal places)

12. Assume a post-audit showed that all estimates (including total sales) were exactly correct except for the variable expense ratio, which actually turned out to be 45%. What was the projects actual net present value? (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate calculations and final answer to the nearest whole dollar amount.)