Cardinal Company is considering a five-year project that would require a $2,755,000 investment in equipment with a useful life of five years and no salvage value. The companys discount rate is 14%. The project would provide net operating income in each of five years as follows:

Sales

$

2,875,000

Variable expenses

1,124,000

Contribution margin

1,751,000

Fixed expenses:

Advertising, salaries, and other fixed out-of-pocket costs

$

721,000

Depreciation

551,000

Total fixed expenses

1,272,000

Net operating income

$

479,000

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

7.

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

9.

If the companys discount rate was 16% instead of 14%, would you expect the project's net present value to be higher, lower, or the same?

	Higher
	Lower
	Same

10.

If the equipment had a salvage value of $300,000 at the end of five years, would you expect the projects payback period to be higher, lower, or the same?

	Higher
	Lower
	Same