Cardinal Company is considering a project that would require a $2,975,000 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 $300,000. The companys discount rate is 14%. The project would provide net operating income each year as follows:

Sales			$	2,735,000
Variable expenses				1,000,000
Contribution margin				1,735,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	735,000
Depreciation		535,000
Total fixed expenses				1,270,000
Net operating income			$	465,000

Required:

1

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

Net present value

$

2

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

3

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

Projects payback period

years

4

What is the projects simple rate of return for each of the five years? (Round your answer to 2 decimal places.)

Simple rate of return

%