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 %
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 %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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i need help with these two accounting 2102 questions. can you show work please
![Required information
The Foundational 15 (Algo) [LO12-1, LO12-2, LO12-3, LO12-5, LO12-6]
[The following information applies to the questions displayed below.]
Cardinal Company is considering a five-year project that would require a $2,805,000 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
Variable expenses
Contribution margin
Fixed expenses:
Advertising, salaries, and other fixed
out-of-pocket costs
Foundational 12-8 (Algo)
$ 642,000
561,000
Depreciation
Total fixed expenses
Net operating income
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table.
Simple rate of return
$ 2,741,000
1,125,000
1,616,000
%
1,203,000
$ 413,000
8. What is the project's simple rate of return for each of the five years? (Round your answer to 2 decimal places.)
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Transcribed Image Text:Required information
The Foundational 15 (Algo) [LO12-1, LO12-2, LO12-3, LO12-5, LO12-6]
[The following information applies to the questions displayed below.]
Cardinal Company is considering a five-year project that would require a $2,805,000 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
Variable expenses
Contribution margin
Fixed expenses:
Advertising, salaries, and other fixed
out-of-pocket costs
Foundational 12-8 (Algo)
$ 642,000
561,000
Depreciation
Total fixed expenses
Net operating income
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table.
Simple rate of return
$ 2,741,000
1,125,000
1,616,000
%
1,203,000
$ 413,000
8. What is the project's simple rate of return for each of the five years? (Round your answer to 2 decimal places.)
< Prev
Saved
co
8
9
8
10
15
of 15 ⠀
MacBook Pro
![Required information
The Foundational 15 (Algo) [LO12-1, LO12-2, LO12-3, LO12-5, LO12-6]
[The following information applies to the questions displayed below.]
Cardinal Company is considering a five-year project that would require a $2,805,000 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
Variable expenses
Contribution margin
Fixed expenses:
Advertising, salaries, and other fixed
out-of-pocket costs
$ 642,000
561,000
$ 2,741,000
1,125,000
1,616,000
Net present value
Depreciation
Total fixed expenses
Net operating income
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table.
1,203,000
$ 413,000
Saved
Foundational 12-13 (Algo)
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 50%. What was the project's actual net present value? (Negative amount should be indicated by a
minus sign. Round intermediate calculations and final answer to the nearest whole dollar amount.)
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Transcribed Image Text:Required information
The Foundational 15 (Algo) [LO12-1, LO12-2, LO12-3, LO12-5, LO12-6]
[The following information applies to the questions displayed below.]
Cardinal Company is considering a five-year project that would require a $2,805,000 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
Variable expenses
Contribution margin
Fixed expenses:
Advertising, salaries, and other fixed
out-of-pocket costs
$ 642,000
561,000
$ 2,741,000
1,125,000
1,616,000
Net present value
Depreciation
Total fixed expenses
Net operating income
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table.
1,203,000
$ 413,000
Saved
Foundational 12-13 (Algo)
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 50%. What was the project's actual net present value? (Negative amount should be indicated by a
minus sign. Round intermediate calculations and final answer to the nearest whole dollar amount.)
< Prev
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