Cardinal Company is considering a project that would require a $2,875,000 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 16%. The project would provide net operating income each year as follows:

Sales			$	2,871,000
Variable expenses				1,018,000
Contribution margin				1,853,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	753,000
Depreciation		515,000
Total fixed expenses				1,268,000
Net operating income			$	585,000

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 45%. What was the projects actual simple rate of return?