Question
es Required information The Foundational 15 (Algo) [LO14-1, LO14-2, LO14-3, LO14-5, LO14-6] [The following information applies to the questions displayed below.] Cardinal Company is
es Required information The Foundational 15 (Algo) [LO14-1, LO14-2, LO14-3, LO14-5, LO14-6] [The following information applies to the questions displayed below.] Cardinal Company is considering a five-year project that would require a $2,945,000 Investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 18%. The project would provide net operating income in each of five years as follows: Sales Variable expenses $2,873,000 1,019,000 1,854,000 Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs $ 754,000 Depreciation 589,000 Total fixed expenses. 1,343,000 $511,000 Net operating income Click here to view Exhibit 148-1 and Exhibit 148-2. to determine the appropriate discount factor(s) using table. Foundational 14-9 (Algo) 9. If the company's discount rate was 20% Instead of 18%, would you expect the project's net present value to be higher, lower, or the same?
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