The company's discount rate is 12%. Required: 1. Compute the annual net cash inflow from the project. 2. Compute the project's net present value. Is the project acceptable? 3. Compute the project's payback period. 4. Compute the project's simple rate of return. Solution to Review Problem 1. The annual net cash inflow can be computed by deducting the cash expenses from sales: $3,000,000 Variable expenses 1,800,000 Contribution margin......." 1,200,000 Advertising, salaries, and other fixed out-of-pocket costs..... 700,000 Annual net cash inflow... $ 500,000 Or the annual net cash inflow can be computed by adding depreciation back to net operating income: Net operating income ... $200,000 Add: Noncash deduction for depreciation... 300,000 Annual net cash inflow...... $500,000