Cardinal Company is considering a five-year project that would require a $3,025,000 investment in equipment with auseful life of five years and no salvage value. The company's discount rate is 16 %. The project would provide netoperating income in each of five years as follows:SalesVariable expensesContribution marginFixed expenses:$ 2,737,0001,001,0001,736,000Advertising, salaries, and other fixed out-of-pocket costs$ 610,000605,000DepreciationTotal fixed expenses1,215,000Net operating income$ 521,000Click here to view Exhibit 128-1 and Exhibit 128-2, to determine the appropriate discount factor(s) using table.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 aminus sign. Round intermediate calculations and final answer to the nearest whole dollar amount.)

There can be many projects available with the investors and the decision is to be made to choose the…

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 Variable expenses Contribution margin Fixed expenses: $ 2,737,000 1,001,000 1,736,000 Advertising, salaries, and other fixed out- of-pocket costs Depreciation $ 610,000 605,000 Total fixed expenses 1,215,000 $ 521,000 Net operating income Click here to view Exhibit 128-1 and Exhibit 128-2, to determine the appropriate discount factor(s) using table. 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.)

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 Variable expenses Contribution margin Fixed expenses: $ 2,737,000 1,001,000 1,736,000 Advertising, salaries, and other fixed out- of-pocket costs Depreciation $ 610,000 605,000 Total fixed expenses 1,215,000 $ 521,000 Net operating income Click here to view Exhibit 128-1 and Exhibit 128-2, to determine the appropriate discount factor(s) using table. 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.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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