Question
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 $ 2,735,000 1,000,000 1,735,000 Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of- pocket costs Depreciation Total fixed expenses Net operating income $ 735,000 595,000 1,330,000 $405,000 Click here to view Exhibit 148-1 and Exhibit 14B-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.)
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