Question
[The following information applies to the questions displayed below.] Cardinal Company is considering a five-year project that would require a $2,810,000 investment in equipment with
[The following information applies to the questions displayed below.] |
Cardinal Company is considering a five-year project that would require a $2,810,000 investment in equipment with a useful life of five years and no salvage value. The companys discount rate is 16%. The project would provide net operating income in each of five years as follows: |
Sales | $ | 2,847,000 | ||
Variable expenses | 1,121,000 | |||
Contribution margin | 1,726,000 | |||
Fixed expenses: | ||||
Advertising, salaries, and other fixed out-of-pocket costs | $ | 782,000 | ||
Depreciation | 562,000 | |||
Total fixed expenses | 1,344,000 | |||
Net operating income | $ | 382,000 | ||
Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. |
1.
Required information
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.) | |||||||||||||||||||||||||||||||
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