Cardinal Company is considering a project that would require a $2,500,000 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 $200,000. The companys discount rate is 12%. The project would provide net operating income each year as follows:

Sales			$	2,853,000
Variable expenses				1,200,000
Contribution margin				1,653,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	790,000
Depreciation		460,000
Total fixed expenses				1,250,000
Net operating income			$	403,000

Required:

If the equipments salvage value was $400,000 instead of $200,000, what would be the projects simple rate of return? (Round your answer to 2 decimal places.)

Simple rate of return Last question......doesn't like my answer! :(

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