Required information The Foundational 15 (Algo) [LO12-1, LO12-2, LO12-3, LO12-5, LO12-6] [The following information applies to the questions displayed below] Cardinal Company is considering a five-year project that would require a $2,855,000 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: Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table. Foundational 12-1 (Algo) Required: 1. Which item(s) in the income statement shown above will not affect cash flows? (You may select more than one answer. Single click 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 question mark will be automatically graded as incorrect.) Sales Variable expenses Advertsing, saiariet, and other fired out of pocket costs expemes Depreciation expense 2. What are the project's annual net cash inflows? 3. What is the present value of the project's annual net cash inflows? (Round your 4. What is the project's net present value? (Round final answer to the nearest whole dollar amount.) 5. What is the profitability index for this project? (Round your answer to 2 decimal places.) 6. What is the project's internal rate of return? 7. What is the project's payback period? (Round your answer to 2 decimal places.) 8. What is the project's simple rate of return for each of the five years? (Round your answer to 2 decimal places.) 9. If the company's discount rate was 16% instead of 14%, would you expect the project's net present value to be higher, lower, or the same? Higher Lower Same 10. If the equipment had a salvage value of $300,000 at the end of five years, would you expect the project's payback period to be higher, lower, or the same? Higher Lower Same 11. If the equipment had a salvage value of $300,000 at the end of five years, would you expect the project's net present value to be higher, lower, or the same? Higher Lower Same 12. If the equipment had a salvage value of $300,000 at the end of five years, would you expect the project's simple rate of return to be higher, lower, or the same? Higher Lower Same 13. Assume a postaudit showed that all estimates (including total sales) were exactly correct except for the variable expense ratio, which actually turned out to be 50%. What was the project's actual net present value? (Negative amount should be indicated by a minus sign. Round intermediate calculations and final answer to the nearest whole dollar amount.) 14. Assume a postaudit showed that all estimates (including total sales) were exactly correct except for the variable expense ratio. Which actually turned out to be 50%. What was the project's actual payback period? (Round your answer to 2 decimal places.) 15. Assume a postaudit showed that all estimotes (including total sales) were exactly correct except for the variable expense ratio. Which actually turned out to be 50%. What was the project's actuol simple rate of return? (Round your answer to 2 decimal places.)
