Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Required information [The following information applies to the questions displayed below.] Cardinal Company is considering a five-year project that would require a $2,975,000 investment
Required information [The following information applies to the questions displayed below.] Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 14%. The project would provide net operating income in each of five years as follows: Sales. Variable expenses Fixed expenses: Contribution margin Advertising, salaries, and other fixed out- $ 735,000 595,000 of-pocket costs Depreciation $ 2,735,000 1,000,000 1,735,000 Total fixed expenses Net operating income 1,330,000 $ 405,000 Click here to view Exhibit 148-1 and Exhibit 148-2. to determine the appropriate discount factor(s) using table. 4. What is the project's net present value? (Round final answer to the nearest whole dollar amount.) Answer is complete but not entirely correct. Net present value $ (1,585,143) Required information [The following information applies to the questions displayed below.] Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 14%. The project would provide net operating income in each of five years as follows: Sales Variable expenses Contribution margin $ 2,735,000 1,000,000 1,735,000 Fixed expenses: Advertising, salaries, and other fixed out- of-pocket costs $ 735,000 Depreciation 595,000 Total fixed expenses 1,330,000 Net operating income $ 405,000 Click here to view Exhibit 148-1 and Exhibit 148-2, to determine the appropriate discount factor(s) using table. 5. What is the profitability index for this project? (Round your answer to 2 decimal places.) Profitability index
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started