Cardinal Company is considering a five-year project that would require a $2,812,000 investment in equipment with a useful life of five years and no salvage value. The companys discount rate is 16%. The project would provide net operating income in each of five years as follows:

Sales		$ 2,855,000
Variable expenses		1,010,000
Contribution margin		1,845,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$ 798,000
Depreciation	562,400
Total fixed expenses		1,360,400
Net operating income		$ 484,600

Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table.

Foundational 12-6 (Algo)

6. What is the projects internal rate of return?

Cardinal Company is considering a five-year project that would require a $2,812,000 investment in equipment with a useful life of five years and no salvage value. The companys discount rate is 16%. The project would provide net operating income in each of five years as follows:

Sales		$ 2,855,000
Variable expenses		1,010,000
Contribution margin		1,845,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$ 798,000
Depreciation	562,400
Total fixed expenses		1,360,400
Net operating income		$ 484,600

Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table.

Foundational 12-14 (Algo)

14. 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 45%. What was the projects actual payback period? (Round your answer to 2 decimal places.)

Cardinal Company is considering a five-year project that would require a $2,812,000 investment in equipment with a useful life of five years and no salvage value. The companys discount rate is 16%. The project would provide net operating income in each of five years as follows:

Sales		$ 2,855,000
Variable expenses		1,010,000
Contribution margin		1,845,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$ 798,000
Depreciation	562,400
Total fixed expenses		1,360,400
Net operating income		$ 484,600

Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table.

Foundational 12-15 (Algo)

15. 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 45%. What was the projects actual simple rate of return? (Round your answer to 2 decimal places.)