Cardinal Company is considering a five-year project that would require useful life of five years and no salvage value. The company's discount ra income in each of five years as follows: Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses $2,739,000 1, 100,000 1, 639, 000 $641, 000 578, 000 1,219, 000 $ 420,000 Net operating income
Cardinal Company is considering a five-year project that would require useful life of five years and no salvage value. The company's discount ra income in each of five years as follows: Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses $2,739,000 1, 100,000 1, 639, 000 $641, 000 578, 000 1,219, 000 $ 420,000 Net operating income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Cardinal Company is considering a five-year project that would require a $2,890,000 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
Variable expenses
Contribution margin
Fixed expenses:
Advertising, salaries, and other
fixed out-of-pocket costs
Depreciation
Total fixed expenses
$2,739,000
1, 100, 000
1,639,000
$641,000
578,000
1, 219, 000
$ 420,000
Net operating income
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table.
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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8c845cf8-3d77-4ddd-9d5a-2a560adfc5de%2Fd9813e61-9e8e-4d40-bd0c-d51b606b1354%2F3z23oq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Cardinal Company is considering a five-year project that would require a $2,890,000 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
Variable expenses
Contribution margin
Fixed expenses:
Advertising, salaries, and other
fixed out-of-pocket costs
Depreciation
Total fixed expenses
$2,739,000
1, 100, 000
1,639,000
$641,000
578,000
1, 219, 000
$ 420,000
Net operating income
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table.
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
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