Question

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 18%. The project would provide net operating income in each of five years as follows:

Sales | $ | 2,865,000 | ||

Variable expenses | 1,015,000 | |||

Contribution margin | 1,850,000 | |||

Fixed expenses: | ||||

Advertising, salaries, and other fixed out-of-pocket costs | $ | 750,000 | ||

Depreciation | 591,000 | |||

Total fixed expenses | 1,341,000 | |||

Net operating income | $ | 509,000 | ||

**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.)**

- Salesunchecked
- Variable expensesunchecked
- Advertising, salaries, and other fixed out-of-pocket costs expensesunchecked
- 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 final answer to the nearest whole
dollar amount.)**

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.)**

5. What is the project profitability index for this project?
**(Round your answer to 2 decimal places.)**

Answer #1

Cardinal Company is considering a five-year project that would
require a $2,500,000 investment in equipment with a useful life of
five years and no salvage value. The company’s discount rate is
12%. The project would provide net operating income in each of five
years as follows: Sales $ 2,853,000 Variable expenses 1,200,000
Contribution margin 1,653,000 Fixed expenses: Advertising,
salaries, and other fixed out-of-pocket costs $ 790,000
Depreciation 500,000 Total fixed expenses 1,290,000 Net operating
income $ 363,000 Click here to...

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:
Sales
$
2,867,000
Variable expenses
1,125,000
Contribution margin
1,742,000
Fixed expenses:
Advertising, salaries, and other
fixed out-of-pocket costs
$
706,000
Depreciation
571,000
Total fixed expenses
1,277,000
Net operating income
$
465,000
Foundational 12-4
4....

Cardinal Company is considering a five-year project that would
require a $3,025,000 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 $2,737,000
Variable expenses $1,001,000
Contribution margin $1,736,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs
$610,000
Depreciation $605,000
Total fixed expenses $1,215,000
Net operating income $521,000
4. What is the project's net...

Cardinal Company is considering a five-year project that would
require a $3,025,000 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 $2,737,000
Variable expenses $1,001,000
Contribution margin $1,736,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs
$610,000
Depreciation $605,000
Total fixed expenses $1,215,000
Net operating income $521,000
5. What is the project profitability...

Cardinal Company is considering a five-year project that would
require a $2,850,000 investment in equipment with a useful life of
five years and no salvage value. The company’s discount rate is
18%. The project would provide net operating income in each of five
years as follows:
Sales
$
2,857,000
Variable expenses
1,011,000
Contribution margin
1,846,000
Fixed expenses:
Advertising, salaries, and other
fixed out-of-pocket costs
$
799,000
Depreciation
570,000
Total fixed expenses
1,369,000
Net operating income
$
477,000
Click here to...

Cardinal Company is considering a five-year project that would
require a $2,915,000 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
$
2,863,000
Variable expenses
1,014,000
Contribution margin
1,849,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs
$
781,000
Depreciation
583,000
Total fixed expenses
1,364,000
Net operating income
$
485,000
Click here to...

Cardinal Company is considering a project that would require a
$2,875,000 investment in equipment with a useful life of five
years. At the end of five years, the project would terminate and
the equipment would be sold for its salvage value of $300,000. The
company’s discount rate is 16%. The project would provide net
operating income each year as follows:
Sales
$
2,871,000
Variable
expenses
1,018,000
Contribution
margin
1,853,000
Fixed expenses:
Advertising,
salaries, and other
fixed out-of-pocket costs
$...

Cardinal Company is considering a five-year project that would
require a $2,812,000 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
$
2,855,000
Variable expenses
1,010,000
Contribution margin
1,845,000
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs
$
798,000
Depreciation
562,400
Total fixed expenses
1,360,400
Net operating income
$
484,600
Click here to...

Cardinal Company is considering a project that would require a
$2,765,000 investment in equipment with a useful life of five
years. At the end of five years, the project would terminate and
the equipment would be sold for its salvage value of $200,000. The
company’s discount rate is 12%. The project would provide net
operating income each year as follows:
Sales
$
2,861,000
Variable
expenses
1,101,000
Contribution
margin
1,760,000
Fixed expenses:
Advertising,
salaries, and other
fixed out-of-pocket costs
$...

Cardinal Company is considering a project that would require a
$2,805,000 investment in equipment with a useful life of five
years. At the end of five years, the project would terminate and
the equipment would be sold for its salvage value of $400,000. The
company’s discount rate is 14%. The project would provide net
operating income each year as follows:
Sales
$
2,741,000
Variable
expenses
1,125,000
Contribution
margin
1,616,000
Fixed expenses:
Advertising,
salaries, and other
fixed out-of-pocket costs
$...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 6 minutes ago

asked 41 minutes ago

asked 41 minutes ago

asked 50 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago