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 $ 2,865,000 1,015,000 1,850,000 Fixed expenses: Advertising, salaries, and other fixed out- of-pocket costs Depreciation $ 750,000 591,000 Total fixed expenses 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 12-14 (Algo) 14. 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 payback period? (Round your answer to 2 decimal places.) Payback period years
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 $ 2,865,000 1,015,000 1,850,000 Fixed expenses: Advertising, salaries, and other fixed out- of-pocket costs Depreciation $ 750,000 591,000 Total fixed expenses 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 12-14 (Algo) 14. 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 payback period? (Round your answer to 2 decimal places.) Payback period years
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![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
$ 2,865,000
1,015,000
1,850,000
Fixed expenses:
Advertising, salaries, and other fixed out-
of-pocket costs
Depreciation
$ 750,000
591,000
Total fixed expenses
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 12-14 (Algo)
14. 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 payback period?
(Round your answer to 2 decimal places.)
Payback period
years](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcfcf7fca-1d3d-4a31-b989-bccc16fc23cd%2F1a9fc06e-70f4-4a91-ac4e-597e8d70fb98%2Fkpma14j_processed.png&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
$ 2,865,000
1,015,000
1,850,000
Fixed expenses:
Advertising, salaries, and other fixed out-
of-pocket costs
Depreciation
$ 750,000
591,000
Total fixed expenses
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 12-14 (Algo)
14. 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 payback period?
(Round your answer to 2 decimal places.)
Payback period
years
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
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education