Required information [The following information applies to the questions displayed below.] A company is considering a five-year project that would require a $2,812,000 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: $ 2,855,000 1,010,000 Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses 1,845,000 $ 798,000 562,400 1,360,400 Net operating income 484,600 2. What is the profitability index for this project? (Round your answer to 2 decimal places.) Profitability index
Required information [The following information applies to the questions displayed below.] A company is considering a five-year project that would require a $2,812,000 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: $ 2,855,000 1,010,000 Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs Depreciation Total fixed expenses 1,845,000 $ 798,000 562,400 1,360,400 Net operating income 484,600 2. What is the profitability index for this project? (Round your answer to 2 decimal places.) Profitability index
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Required information
[The following information applies to the questions displayed below.]
A company is considering a five-year project that would require a $2,812,000 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:
$ 2,855,000
1,010,000
1,845,000
Sales
Variable expenses
Contribution margin
Fixed expenses:
Advertising, salaries, and other fixed
out-of-pocket costs
Depreciation
Total fixed expenses
$ 798,000
562,400
1,360,400
Net operating income
484,600
2. What is the profitability index for this project? (Round your answer to 2 decimal places.)
Profitability index](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1d5fb030-0b22-4856-bbc7-ebad53742943%2Fad76c148-a801-4ec5-ad93-28a1c3e7d18f%2Ft4mqfd_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
A company is considering a five-year project that would require a $2,812,000 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:
$ 2,855,000
1,010,000
1,845,000
Sales
Variable expenses
Contribution margin
Fixed expenses:
Advertising, salaries, and other fixed
out-of-pocket costs
Depreciation
Total fixed expenses
$ 798,000
562,400
1,360,400
Net operating income
484,600
2. What is the profitability index for this project? (Round your answer to 2 decimal places.)
Profitability index
![Required information
[The following information applies to the questions displayed below]
A company is considering a five-year project that would require a $2,812,000 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
$ 2,855,000
Variable expenses
Contribution margin
Fixed expenses:
1,010,000
1,845,000
Advertising, salaries, and other fixed
out-of-pocket costs
Depreciation
Total fixed expenses
$ 798,000
562,400
1,360,400
Net operating income
24
484,600
3. What is the project's payback period? (Round your answer to 2 decimal places.)
Project's payback period
years](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1d5fb030-0b22-4856-bbc7-ebad53742943%2Fad76c148-a801-4ec5-ad93-28a1c3e7d18f%2Fkyfe8oj_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below]
A company is considering a five-year project that would require a $2,812,000 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
$ 2,855,000
Variable expenses
Contribution margin
Fixed expenses:
1,010,000
1,845,000
Advertising, salaries, and other fixed
out-of-pocket costs
Depreciation
Total fixed expenses
$ 798,000
562,400
1,360,400
Net operating income
24
484,600
3. What is the project's payback period? (Round your answer to 2 decimal places.)
Project's payback period
years
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