Cardinal Company is considering a project that would require a $2,815,000 investment in equipment with a useful life of five years. At the end of five years, the project would terminate and the equipment would be sold for its salvage value of $400,000. The companys discount rate is 16%. The project would provide net operating income each year as follows:

Sales $2,863,000Variable expenses 1,014,000Contribution margin 1,849,000Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs$781,000 Depreciation 483,000 Total fixed expenses 1,264,000Net operating income $585,000