Cardinal Company is considering a five-year project that would require a $2,500,000 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 $2,853,00 Variable expenses 1,200,000 Contribution Margin 1,653,000 Fixed Expenses: Advertising, salaries, and other fixed out-of-pocket costs 790,000 Depreciation 500,000 total fixed expenses 1,290,000 Net Operating Income 363000.

1. What are the projects annual net cash inflows?

2. What is the present value of the projects annual net cash inflows?

3. What is the projects net present value?

4. What is the project profitability index for this project?

5. What is the projects internal rate of return?

7. What is the project's payback period?

8. What is the project's simple rate of return for each of the five years?

Sales		2,853,000
Variable Expenses		1,200,000
Contribution Margin		1,653,000
Fixed expenses:
Advertising, salaries, and others
fixed out-of-pocket costs	790,000
Depreciation	500,000
Total Fixed Expenses		1,290,000
Net Operating Income		363,000