! Required Information The Foundational 15 (Algo) [LO12-1, LO12-2, LO12-3, LO12-5, LO12-6] [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 Variable expenses Contribution margin Fixed expenses: of-pocket costs Depreciation Advertising, salaries, and other fixed out- $ 750,000 591,000 Total fixed expenses $ 2,865,000 1,015,000 1,850,000 1,341,000 $ 509,000 Net operating income Click here to view Exhibit 12B-1 and Exhibit 12B-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 45%. 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.) Net present value
! Required Information The Foundational 15 (Algo) [LO12-1, LO12-2, LO12-3, LO12-5, LO12-6] [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 Variable expenses Contribution margin Fixed expenses: of-pocket costs Depreciation Advertising, salaries, and other fixed out- $ 750,000 591,000 Total fixed expenses $ 2,865,000 1,015,000 1,850,000 1,341,000 $ 509,000 Net operating income Click here to view Exhibit 12B-1 and Exhibit 12B-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 45%. 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.) Net present value
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Bhupatbhai
![!
Required Information
The Foundational 15 (Algo) [LO12-1, LO12-2, LO12-3, LO12-5, LO12-6]
[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
Variable expenses
Contribution margin
Fixed expenses:
of-pocket costs
Depreciation
Advertising, salaries, and other fixed out-
$ 750,000
591,000
Total fixed expenses
$ 2,865,000
1,015,000
1,850,000
1,341,000
$ 509,000
Net operating income
Click here to view Exhibit 12B-1 and Exhibit 12B-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 45%. 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.)
Net present value](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff96d1d75-08de-4478-baa6-7f5c4ee43635%2F190207dd-5036-4520-8aec-7a22237ac8b9%2Fo9uvbm_processed.jpeg&w=3840&q=75)
Transcribed Image Text:!
Required Information
The Foundational 15 (Algo) [LO12-1, LO12-2, LO12-3, LO12-5, LO12-6]
[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
Variable expenses
Contribution margin
Fixed expenses:
of-pocket costs
Depreciation
Advertising, salaries, and other fixed out-
$ 750,000
591,000
Total fixed expenses
$ 2,865,000
1,015,000
1,850,000
1,341,000
$ 509,000
Net operating income
Click here to view Exhibit 12B-1 and Exhibit 12B-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 45%. 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.)
Net present value
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 3 images
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education