Required Information 2-a. What are the project's annual net cash inflows? [The following information applies to the questions displayed below.] Annual net cash inflow Cardinal Company is considering a five-year project that would require a $2,765,000 Investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 14%. The 2-b. What is the present value of the project's annual net cash inflows? (Round project would provide net operating income in each of five years as follows: discount factor to 5 decimal places) Sales $2, 851, 000 Present value Variable expenses 1, 150, 000 Contribution margin 1, 701, 000 3. What is the project's net present value? (Round discount factor(s) to 3 decimal Fixed expenses : places and final answer to the nearest whole dollar amount.) Advertising, salaries, and other out-of- pocket costs $670,090 Depreciation 553,000 Net present value Total fixed expenses 1, 223, 000 Net operating income $ 478,000 4. What is the project profitability index for this project? (Round discount factor(s) to 3 decimal places and final answer to 2 decimal places.) (Hint. Use Microsoft Excel to calculate the discount factor(s).) Project profitability index Required: 1. Which item(s) in the income statement shown above will not affect 5. What is the project's internal rate of return? (Round your answer to nearest whole cash flows? (You may select more than one answer. Single click percent.) the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a Project's internal rate of return % question mark will be automatically graded as Incorrect.) 6. What is the project's payback period? (Round your answer to 2 decimal places.) ? Sales Project's payback period years 2 Variable expenses 7. What is the project's simple rate of return for each of the five years? (Round your ? Advertising, salaries, and other fixed out-of-pocket costs answer to 2 decimal places. I.e. 0.12342 should be considered as 12.34%.) expenses 2 Depreciation expense Simple rate of return 1% 9. If the equipment had a salvage value of $300,000 at the end 8. If the company's discount rate was 16% Instead of 14%, would 10. If the equipment had a salvage value of $300,000 at the end you expect the project's net present value to be higher, lower, or of five years, would you expect the project's payback period to of five years, would you expect the project's net present value to the same? be higher, lower, or the same? be higher, lower, or the same? O Higher Higher O Higher O Lower O Lower O Lower Same O Same O Same