The Foundational 15 [LO13-1, LO13-2, LO13-3, LO13-5, LO13-6]

[The following information applies to the questions displayed below.]

Cardinal Company is considering a five-year project that would require a $2,945,000 investment in equipment with a useful life of five years and no salvage value. The companys discount rate is 18%. The project would provide net operating income in each of five years as follows:

Sales			$	2,873,000
Variable expenses				1,019,000
Contribution margin				1,854,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs	$	754,000
Depreciation		589,000
Total fixed expenses				1,343,000
Net operating income			$	511,000

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using table.

rev: 05_11_2019_QC_CS-168512

3. What is the present value of the project's annual net cash inflows? (Round your final answer to the nearest whole dollar amount.) Present value $ 1 4. What is the project's net present value? (Round discount factor(s) to 3 decimal places and final answer to the nearest whole dollar amount.) Net present value $ 11 5. What is the project profitability index for this project? (Round your answer to 2 decimal places.) Project profitability index 6. What is the project's internal rate of return? (Round your answer to nearest whole percent.) Project's internal rate of return 7. What is the project's payback period? (Round your answer to 2 decimal places.) Project's payback period years 8. What is the project's simple rate of return for each of the five years? (Round your answer to 2 decimal places.) Simple rate of return 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 45%. What was the project's actual net present value? (Negative amount should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate calculations and final answer to the nearest whole dollar amount.) Net present value 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 45%. What was the project's actual payback period? (Round your answer to 2 decimal places.) Payback period years 15. 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 45%. What was the project's actual simple rate of return? (Round your answer to 2 decimal places.) Simple rate of return