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: 2735000

Variable Expenses: 1000000

CM: 1735000

Fixed Expenses:

Advertising, Slaries, and other fixed out of pocket costs: 735000

Depreciation 535000

Total Fixed Expenses: 1270000

Net Operating Income: 465000

3. What is the present value of the projects annual net cash inflows? (Use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.)

4. What is the present value of the equipments salvage value at the end of five years? (Use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.)

5. What is the projects net present value? (Use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.)

6. What is the project profitability index for this project? (Use the appropriate table to determine the discount factor(s) and final answer to 2 decimal places.)

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

8. What is the projects simple rate of return for each of the five years?

12. If the equipments salvage value was $500,000 instead of $300,000, what would be the projects simple rate of return?

13. 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 net present value?

14. 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 payback period?

15. 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?