Cardinal Company is considering a five-year project that would require a $2,890,000 investment in equipment with a useful life of five years and no salvage value. The companys discount rate is 12%. The project would provide net operating income in each of five years as follows:

Sales			$	2,739,000
Variable expenses				1,100,000
Contribution margin				1,639,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	641,000
Depreciation		578,000
Total fixed expenses				1,219,000
Net operating income			$	420,000

Click here to view Exhibit 8B-1 and Exhibit 8B-2, to determine the appropriate discount factor(s) using tables.

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

Annual net cash flow ........

2-b. What is the present value of the projects annual net cash inflows? (Round discount factor to 3 decimal places.)

Present value.......

3. What is the projects net present value? (Round discount factor(s) to 3 decimal places and final answer to the nearest whole dollar amount.)

Net present value.......

5. What is the project profitability index for this project? (Round discount factor(s) to 3 decimal places and final answer to 2 decimal places.)

Project profitability index.........

6. What is the projects internal rate of return? (Round your answer to nearest whole percent.)

Project's internal rate of return.........

7. What is the projects payback period? (Round your answer to 2 decimal places.)

Project's payback period ......... Years

8. What is the projects simple rate of return for each of the five years? (Round your answer to 2 decimal places. i.e. 0.12342 should be considered as 12.34%.)

Simple rate of return ........

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 50%. What was the projects actual simple rate of return? (Round your answer to 2 decimal places. i.e. 0.12342 should be considered as 12.34%.)

Simple rate of return........