Cardinal Company is considering a project that would require a $2,500,000 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 Variable expenses $2,853, 000 1, 200, 000 1,653, 000 Contribution margin Fixed expens es: Advertising, salaries, and other fixed out -of-pocket costs Depreciation Total fixed expenses $790, 000 460, 000 1, 250, 000 $ 403, 000 Net operating income Click here to view Exhibit 10-1 and Exhibit 10-2. to determine the appropriate discount factor(s) using tables. Required: What is the project profitability index for this project? (Round dliscoun

Cardinal Company is considering a project that would require a $2,500,000 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 Variable expenses $2,853, 000 1, 200, 000 1,653, 000 Contribution margin Fixed expens es: Advertising, salaries, and other fixed out -of-pocket costs Depreciation Total fixed expenses $790, 000 460, 000 1, 250, 000 $ 403, 000 Net operating income Click here to view Exhibit 10-1 and Exhibit 10-2. to determine the appropriate discount factor(s) using tables. Required: What is the project profitability index for this project? (Round dliscoun

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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A 7-year project is expected to provide annual sales of $221,000 with costs of $97,500. The equipment necessary for the project will cost $360,000 and will be depreciated on a straight-line method over the life of the project. You feel that both sales and costs are accurate to +/-15 percent. The tax rate is 21 percent. What is the annual operating cash flow for the worst-case scenario? es Multiple Choice $77,946 $44,504 0 $70,623 $129,329 $49.221
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[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 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 Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using table. rev: 05_11_2019_QC_CS-168512 7. What is the project’s payback period?
Required information [The following information applies to the questions displayed below.] Cardinal Company is considering a five-year project that would require a $2,800,000 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 $ 2,845,000 1,109,000 1,736,000 Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs $ 799,000 Depreciation 560,000 Total fixed expenses 1,359,000 $ 377,000 Net operating income Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using table. 6. What is the project's internal rate of return? Project's internal rate of return %
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Cardinal Company is considering a project that would require a $2,782,000 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 18%. The project would provide net operating income each year as follows: Sales $ 2,873,000 Variable expenses 1,019,000 Contribution margin 1,854,000 Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs $ 754,000 Depreciation 516,400 Total fixed expenses 1,270,400 Net operating income $ 583,600 Required:If the equipment’s salvage value was $400,000 instead of $200,000, what would be the project’s simple rate of return? (Round your answer to 2 decimal places.)
Required information [The following information applies to the questions displayed below.] Cardinal Company is considering a five-year project that would require a $2,975,000 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 Depreciation Total fixed expenses Net operating income $ 735,000 595,000 $ 2,735,000 1,000,000 1,735,000 1,330,000 $ 405,000 Click here to view Exhibit 148-1 and Exhibit 148-2. to determine the appropriate discount factor(s) using table. O Higher O Lower O Same 10. If the equipment had a salvage value of $300,000 at the end of five years, would you expect the project's payback period to be higher, lower, or the same?
The lovely company has a new 4-year project that will have annual sales of 9,300 units. The price per unit it $20,80 and the variable cost per unit is $8.55. The project will require fixed assets of $103.000, which will be depreciated on a 3 year MACRS schedule. The annual depreciation percentages are 33.33 percent, 44.45 percent, 14.81 percent, 7.41 percent, respectively. Fixed costs are $43,000 per year and the tax rate is 34 percent. What is the operating cash flow for year 3?
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Required information [The following information applies to the questions displayed below.] Cardinal Company is considering a five-year project that would require a $2,810,000 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: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses Net operating income $782,000 562,000 Simple rate of return $2,847,000 1,121,000 1,726,000 Click here to view Exhibit 128-1 and Exhibit 128-2, to determine the appropriate discount factor(s) using table. % 1,344,000 $ 382,000 15. 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 project's actual simple rate of return? (Round your answer to 2…
cure Rex Industries plans to expand its product line. The project requires an initial investment of $285,000 to purchase new equipment. The project is expected to generate the following annual revenues and expenses each year during its 9-year life: . Sales revenues Variable costs Contribution margin Fixed costs: - Salary expense - Rent expense Depreciation expense O 4.4 years O 4.6 years O 8.4 years $31,000 39,000 30,000 O 8.9 years O None of the above $170,000 (38,000) $132,000 Operating income The only non-cash item of income or expense is depreciation expense. The salvage value of the equipment at the end of the 9 years is $15,000. What is the payback period of this project in years? Round to one decimal point. (100,000) $32,000 PQ
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