! 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 incone 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.) * Answer is complete but not entirely correct. Payback period 2.68 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 incone 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.) * Answer is complete but not entirely correct. Payback period 2.68 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 incone
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.)
* Answer is complete but not entirely correct.
Payback period
2.68 years](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc4c509f9-cd14-411e-be37-282201ca7523%2Ff48d60c2-91cd-4bb5-a0a5-25a5264fd733%2Fkpmexno_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 incone
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.)
* Answer is complete but not entirely correct.
Payback period
2.68 years
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