Which item(s) in the income statement shown above will not affect cash flows? What are the projects annual net cash inflows? What is the present value of the projects annual net cash inflows? What is the projects net present value? What is the profitability index for this project? What is the projects internal rate of return? What is the projects payback period? What is the projects simple rate of return for each of the five years? If the companys discount rate was 18% instead of 16%, would you expect the project's net present value to be higher, lower, or the same? If the equipment had a salvage value of $300,000 at the end of five years, would you expect the projects payback period to be higher, lower, or the same? 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? If the equipment had a salvage value of $300,000 at the end of five years, would you expect the projects simple rate of return to be higher, lower, or the same? Assume a post-audit 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 projects actual net present value? 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 projects actual payback period? 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 projects actual simple rate of return?

! Required information [The following information applies to the questions displayed below.] Cardinal Company is considering a five-year project that would require a $2,955,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 16%. The project would provide net operating income in each of five years as follows: Sales Variable expenses Contribution margin $ 2,871,000 1,018,000 1,853,000 Fixed exp ses: Advertising, salaries, and other fixed out-of-pocket costs $ 753,000 Depreciation 591,000 Total fixed expenses 1,344,000 Net operating income $ 509,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2; to determine the appropriate discount factor(s) using table. EXHIBIT 148-1 Present Value of $1;1(1+r) Periods 5% 1 0.952 0943 0935 0.926 F St 6 0.962 ST 569 %L 0 568 0590 2 1990 190 WO HO 9020 SILO SELO (20 9620 6920 820 1640 ZINO 9280 2950 LS80 280 0680 2060 $260 6880 1190 8590 SL90 (60 2140 ICO ISCO ZLEO 1620 9180 080 1980 Y90 650 6090 6450 1950 9990 56 TECO 9600 501 3 0551 0.337 0524 0.512 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0636 0613 0.392 0.572 0552 0534 0516 0499 0482 0467 0451 0.437 0423 0410 5 0.822 0.784 0.747 0.713 0681 0.650 0.621 0.593 0567 0543 0.519 0497 0476 0456 0437 0419 0402 0.386 0.370 0.355 0.341 0.328 16 0.790 0.746 0.705 0.630 0.596 0.564 0515 0.507 0480 0456 0432 0410 0.390 0370 0352 0335 0319 0303 0289 0275 0262 0.760 0,711 0.665 0.623 0.583 0547 0513 0482 0452 0425 0.400 0.375 0.354 0333 0314 0.296 0.279 0263 0249 0235 0222 0.210 7 8 OLTO LIEO ILEO 960 SET 11% 12% 15% 20% 215 22% 23% 25% 0917 0.909 0.901 0893 0.885 0877 0.870 0.862 0.855 0847 0840 0.833 0826 0820 0813 0806 0800 10 0.645 0.592 0544 0500 0460 0424 0.391 0361 0333 0.308 0.263 0243 0225 0.209 0.194 0.180 0.167 0.155 0144 0.134 0676 0614 0.558 0.508 0463 0422 0.386 0352 0.322 0.295 0270 0247 0.227 0208 0.191 0.176 0.162 0149 0.137 0.126 0.116 0.107 11 0585 0527 0475 0429 0.388 0.350 0.317 0287 0261 6237 0215 0.195 0.178 0.162 0.148 0.135 0.123 0.112 0.103 12 0.625 0.557 0497 0444 0397 0.356 0319 0286 0.257 0.231 02080.187 0.168 0.152 0.137 0.124 0.112 13 0530 0.469 0415 0368 0.326 0290 0258 0.229 0.204 0.601 0.382 0.163 0.145 0.130 0.116 0.104 14 0.577 0.505 0442 0388 0.340 0.299 0.263 0.232 0205 0.181 0.555 0481 0417 0.362 0315 0.055 0093 0084 0.075 0.068 0061 0049 0.044 0.078 0069 00620055 0.074 0.032 10.028 16 0534 0.458 0.394 0.339 0.292 0252 0218 0.188 0.163 0.141 17 0.513 0231 18 19 0.062 0054 0.047 0045 0039 0034 0.030 0026 0.023 0044 0038 0032 0.025 0.024 0.021 0.095 0.081 0.069 0.059 0.051 0.494 0416 0350 0296 0.250 0.212 0.180 0.153 0.130 0.111 0475 0.277 0.232 20 0.456 0.377 0312 0258 0215 0.178 0.149 0.124 0.104 0087 0.015 0013 0011 0.009 21 0439 0.359 0.294 0242 0.199 0.164 0.135 0.112 0.093 0.077 0.064 0.053 0044 0.037 0.031 0026 0.022 0018 0015 0013 0011 0009 0.007 0.422 0.083 0.068 0056 0.046 0.038 0032 0.026 0.022 0018 0342 0278 0226 0.184 0.150 0.123 0.101 0.033 0027 0022 0.018 0015 0012 0010 0.009 0.007 0.006 22 0.043 0.035 0.028 0016 0038 0.030 0.024 0.020 0.033 0.026 0.021 0013 0010 0.009 0.007 0.006 0.005 0.004 0017 0014 0011 0.009 0.007 0.006 0.005 0.029 0023 0.018 0014 0011 0.009 0.008 0.006 0.005 0.004 0.003 0.004 0.003 9110 0510 9610 SSTO SM 591 5641 8910 6410 1610 POCO SITO LETO SITO 9950 STO SOCO LZCO ISCO 9LCO 100 KYO 290 2050 050 2850 2290 LL90 1620 COCO 19TO 581 561 1710 0910 9010 EO 010 0910 CTO 60CO 64TO SITO 8600 9110 TO 1910 1610 R C100 6100 0900 1200 1600 211O SETO OCIO 1120 900 900 900 10 L610 LITO 0150 (500 9900 2800 2010 9210 8510 LEO0 L100 CCOO 2100 1500 6900 0600 8800 6600 to Scro 1000 1800 1600 1010 110 2500 0900 6900 0800 600 8010 S210 SPIO OLIO 9610 0.095 0.084 0.390 0.059 0.047 25 0.375 0.295 0233 0.184 0.146 0.116 0092 0.074 0.361 0281 0.220 0.172 0.135 0.106 0.084 0.066 0.053 0042 0.268 0207 0.161 0.125 0.098 0.076 0.060 26 27 0.347 28 0333 29 0321 0.243 0.185 0.141 0.107 0.082 0.063 0.048 0037 0.029 0.308 0.231 0.174 0.131 0.099 0.075 0.057 0.044 0.033 0.026 0.020 0015 0.012 0.009 0.007 0208 0.142 0.097 0.067 0.046 0.032 0.022 0015 0.011 40 ROO 2200 100 100 100 1500 000 000 1500 1900 ELOTO 2200 9200 1000 200 $100 9900 | 0100 2100 9100 0000 9000 1100 100 2100 2200 9000 2500 1600 9900 6910 9100 TRUO 2600 tore SIC 1500 9100 2100 0190 0590 200 6100 SECO 000 $100 5000 9000 LO0O 8000 0100 C100 $100 6100 200 $100 M100 2100 oCuO 100 9100 2100 0.002 1000 1000 2000 1000 1000 5000 9000 4000 2000 2000 1000 1000 5000 9000 0.002 0.002 5000 1000 2000 2000 000 0000 0000 0000 0000 0000 1000 1000 1000 2000 1000 1000 5000 8000 EXHIBIT 148-2 Present Value of an Annuity of $1 in Arrears; 1 r[1-1(1+r)n] 10% 25% 1 2 3 4 5 6 7 8 9 7.435 7.108 10 8.111 7.722 11 12 13 14 15 Periods 4% 5% 6% 7% 8% 99 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 0.962 0.952 24% 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.800 1.886 1.859 1,833 1.808 1.783 1.759 1.736 1.713 1.690 1668 1647 1.626 1.605 1585 1566 1547 1528 1509 1492 1474 1457 1440 2.775 2.723 2.673 2,624 2577 2.531 2487 2444 2.402 2.361 2.322 2.283 2246 2210 2.174 2.140 2.106 2074 2042 2011 1981 1952 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.102 3.037 2.974 2.914 2.855 2.798 2.743 2.690 2639 2.589 2.540 2494 2448 2404 2.362 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.696 3.605 3.517 3433 3.352 3.274 3.199 3.127 3.058 2.991 2926 2.864 2.803 2.745 2.689 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4231 4.111 3.998 3.889 3.784 3.685 3.589 3498 3410 3.326 3.245 3.167 3.092 3.020 2.951 6.002 5.786 5582 5.389 5.206 5.033 4.868 4.712 4564 4.423 4.288 4.160 4.039 3.922 3.812 3.706 3.605 3.508 3416 3.327 3.242 3.161 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 4.799 4.639 4.487 4.344 4.207 4.078 3954 3.837 3.726 3.619 3518 3421 3.329 6.802 6515 6.247 5.995 5.759 5.537 5.328 5.132 4.946 4.772 4.607 4451 4.303 4.163 4,031 3.905 3.786 3.673 3.566 3463 7.360 7.024 6.710 6.418 6.145 5.889 5.650 5.426 5216 5019 4.833 4.659 4494 4.339 4.192 4.054 3.923 3.799 3.682 3571 8.760 8.306 7.887 7,499 7.139 6.805 6.495 6.207 5.938 5.687 5453 5.234 5,029 4.836 4.656 4.486 4.327 4.177 4.035 3.902 3,776 3.656 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6492 6.194 5.918 5.660 5421 5.197 4988 4.793 4.611 4.439 4.278 4.127 3.985 3.851 3.725 9.986 9.394 8.853 8.358 7.904 7487 7.103 6.750 6.424 6.122 5.842 5.583 5.342 5.118 4.910 4.715 4.533 4.362 4.203 4.053 3.912 3.780 10.563 9.899 9.295 8.745 8,244 7.786 7.367 6.982 6.628 6.302 6.002 5.724 5.468 5.229 5.008 4.802 4.611 4432 4.265 4.108 3.962 3.824 11.118 10.380 9.712 9.108 8.559 8.061 7.606 7.191 6.811 6.462 6.142 5.847 5.575 5.324 5.092 4.876 4.675 4489 4.315 4.153 4.001 3.859 11.652 10.838 10.106 9.447 8.851 8.313 7.824 7.379 6.974 6.604 6.265 5.954 5.668 5405 5.162 4.938 4.730 4.536 4357 4.189 4,033 3.887 12,166 11.274 10.477 9.763 9.122 8.544 8.022 7.549 7.120 6.729 6.373 6.047 5.749 5475 5.222 4990 4.775 4.576 4.391 4.219 4059 3.910 8.201 7.702 7.250 4.812 4.608 4.419. 6.840 6.467 6.128 5.818 5.534 5.273 5.033 4.243 12.659 11.690 10.828 10.059 9.372 8.756 4.080 3.928 8.950 7.839 5.877 5.584 5.316 4.097 8.365 3.942 13.134 12.085 11.158 10.336 9.604 7.366 6.938 6.550 6.198 5.070 4.843 4.635 4.442 4263 4.870 4657 4460 4.279 4.110 3.954 7.025 6.623 6.259 5.929 5.628 5.353 5.101 13.590 12.462 11 470 10.594 9.818 9.129 8.514 7.963 7469 6.312 5973 5.665 5.384 5.127 8.649 8.075 7562 7.102 6.687 4891 4.675 4.476 4.292 4.121 3.963 14.029 12.821 11.764 10.836 10.017 9.292 6.359 6.011 5.696 5410 5.149 4.909 4.690 4.488 4.302 4.130 8.772 8.176 7.645 7.170 6.743 14.451 13.163 12.042 11.061 10.201 9442 4311 6.792 6.399 4.137 6044 5.723 5432 5.167 4925 4.703 4.499 9.580 8.883 14.857 13.489 12.303 11.272 10.371 8.266 7.718 7.230 6.835 6.434 6.073 5.746 5451 5.182 4937 4,713 4.507 4.318 4.143 3.981 15.247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 7.784 7.283 4.323 4.147 3.985 9.077 15.622 14.094 12.783 11 654 10.675 9.823 8.422 7.843 7.330 6.873 6.464 6.097 5,766 5467 5.195 4.948 4.721 4.514 6.118 5.783 5480 5.206 4.956 4.728 4.520 4.328 4.151 3.988 15.983 14.375 13.003 11.826 10.810 9.929 9.161 8.488 7.896 7.372 6.906 6.491 4.524 4.332 4.154 3.990 13.211 11.987 10.935 10.027 9.237 8.548 7.943 7409 6.935 6.514 6.136 5.798 5492 5.215 4.964 4.734 4528 4.335 4.157 3.992 8.602 7.984 7441 6.961 6.534 6.152 5.810 5.502 5.223 4.970 4.739 11.051 10.116 9.307 4.337 4.159 3994 8.650 8.022 7470 6.983 6.551 6.166 5.820 5.510 5.229 4.975 4.743 4.531 12.278 11.158 10.198 9.370 4.339 4,160 3.995 7.496 7.003 6.566 6.177 5.829 5517 5.235 4.979 4.746 4.534 12.409 11.258 10.274 9.427 8.694 8.055 4.760 4544 4.347 4,166 3.999 8.951 8.244 7.634 7.105 6.642 6.233 5.871 5.548 5.258 4.997 13.332 11.925 10.757 9.779 16 17 18 19 20 21 3,970 22 3.976 23 24 25 26 27 16.330 14643 28 29 16.663 14.898 13.406 12.137 16.984 15.141 13.591 17.292 15.372 13.765 19.793 17.159 15.046 30 40