Cardinal Company is considering a project that would require a $2,815,000 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 16%. The project would provide net operating income each year as follows: Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses $2,863,000 1,014,000 1,849,000 $781,000 483,000 1,264,000 $ 585,000 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 present value of the project's annual net cash inflows? (Round discount factor(s) to 3 decimal places and final answer to the nearest dollar amount.)
Cardinal Company is considering a project that would require a $2,815,000 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 16%. The project would provide net operating income each year as follows: Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses $2,863,000 1,014,000 1,849,000 $781,000 483,000 1,264,000 $ 585,000 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 present value of the project's annual net cash inflows? (Round discount factor(s) to 3 decimal places and final answer to the nearest dollar amount.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Cardinal Company is considering a project that would require a $2,815.000 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 16%. The project would provide net operating income each year as follows:
$2,863,000
1,014,000
1,849,000
Sales
Variable expenses
Contribution margin
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs
Depreciation
Total fixed expenses
$781,000
483,000
1,264,000
Net operating income
585,000
Click here to view Exhibit 10-1 and Exhibit 10-2, to determine the appropriate discount factor(s) using tables.
Required:
What is the present value of the project's annual net cash inflows? (Round discount factor(s) to 3 decimal places and final answer to
the nearest dollar amount.)
Present value](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7c8d0b20-b01e-48fb-8221-aea2db540516%2Fc654300b-4d4c-438c-a7f2-107d52b82e2c%2Fb2xlsfo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Cardinal Company is considering a project that would require a $2,815.000 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 16%. The project would provide net operating income each year as follows:
$2,863,000
1,014,000
1,849,000
Sales
Variable expenses
Contribution margin
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs
Depreciation
Total fixed expenses
$781,000
483,000
1,264,000
Net operating income
585,000
Click here to view Exhibit 10-1 and Exhibit 10-2, to determine the appropriate discount factor(s) using tables.
Required:
What is the present value of the project's annual net cash inflows? (Round discount factor(s) to 3 decimal places and final answer to
the nearest dollar amount.)
Present value
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 5 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
Expert Answers to Latest Homework Questions
Q: Under the online learning framework, we want to learn a concept from concept class C,
where C is the…
Q: g12 PPhysics - 3
Q: Physics 12 -2
Q: Physics G12 -1
Q: Give me answer
Q: 3. Consider a hypothetical chemical reaction:
WKNO3 → xK + yN2 +zO2.
(a) Write a system of 3…
Q: 6. Moles of CO2 generated: Mass of CO2 evolved x (1 mole/44.01 g) =
[Calcium Carbonate]
Q: need answer
Q: *
The following financial information is from Shovels Construction Company.
Accounts payable…
Q: Determine the hydraulic flux and the pressure head at the layer interface in a column consisting of…
Q: I need typing clear urjent no chatgpt use i will give 5 upvotes
full explanation
Q: I need typing clear urjent no chatgpt use i will give 5 upvotes
full explanation
Q: Processing of results
Calculate (and show your calculations) for each
acetic acid solution
1. the…
Q: Draw the structure of the coupling product formed when the following pair of compounds is treated…
Q: Hello tutor please answer provide
Q: Need help with this Question please provide Solutions
Q: Please provide Solutions for this Question
Q: Your income last year was $40,000 with growth of
8% for 20 years. The discount rate is warranted at…
Q: An all-equity firm has a net income of $46,420,
depreciation of $3,758, and taxes of $23,915. What…
Q: An investment with an initial cost of $15,000
produces cash flows of $5,000 annually for 5 years.
If…
Q: not use ai