[The following information applies to the questions displayed below.] Cardinal Company is considering a five-year project that would require a $2,975,000 useful life of five years and no salvage value. The company's discount rate income in each of five years as follows: Sales $ 2,735,000 1,000,000 1,735,000 Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out- of-pocket costs Depreciation Total fixed expenses $ 735,000 595,000 1,330,000 $ 405,000 Net operating income Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount 14. Assume a postaudit showed that all estimates including total sales) were exactly correct ex which actually turned out to be 45%. What was the project's actual payback period? (Round yo
[The following information applies to the questions displayed below.] Cardinal Company is considering a five-year project that would require a $2,975,000 useful life of five years and no salvage value. The company's discount rate income in each of five years as follows: Sales $ 2,735,000 1,000,000 1,735,000 Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out- of-pocket costs Depreciation Total fixed expenses $ 735,000 595,000 1,330,000 $ 405,000 Net operating income Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount 14. Assume a postaudit showed that all estimates including total sales) were exactly correct ex which actually turned out to be 45%. What was the project's actual payback period? (Round yo
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.]
Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a
useful life of five years and no salvage value. The company's discount rate
income in each of five years as follows:
$ 2,735,000
1,000,000
Sales
Variable expenses
Contribution margin
Fixed expenses:
Advertising, salaries, and other fixed out-
of-pocket costs
Depreciation
Total fixed expenses
1,735,000
$ 735,000
595,000
1,330,000
Net operating income
$ 405,000
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table.
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%2Fda625b26-af5c-4d40-b5ca-dba856450987%2Fc41f5094-45f8-43c8-bc47-2b3fb29e6833%2F7p420zj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Cardinal Company is considering a five-year project that would require a $2,975,000 investment in equipment with a
useful life of five years and no salvage value. The company's discount rate
income in each of five years as follows:
$ 2,735,000
1,000,000
Sales
Variable expenses
Contribution margin
Fixed expenses:
Advertising, salaries, and other fixed out-
of-pocket costs
Depreciation
Total fixed expenses
1,735,000
$ 735,000
595,000
1,330,000
Net operating income
$ 405,000
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table.
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
Transcribed Image Text:0.593
0.467
Apps School Login
iting/garrison_17e/Exhibit/Exhibit_14B_1.htm
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0.255
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Update
EXHIBIT 14B-1
Present Value of $1; 1 ( 1 + r ) n
Reading L
Periods
4%
5%
0.952
6%
7%
8%
9%
10%
0.926 0,917 0.909 0.901
11%
12%
0.893 0.885 0.877
0.797 | 0.783 0.769
0.712 0.693
1
0.962
0.943
13%
14%
15%
0.935
0.873 0.857 0.826
0.816| 0.794
16%
18%
0.870 0.862 0.855 0.847 0.840 0.833
17%
19% 20%
21%
0.826 0.820 0.813 0.806
0.683 0.672 0.661 0.650 0.640
0.925
0.907
0,890
0.873
22%
23%
24% 25%
0.842
0.812
3.
0.756 0.743 0.731 0
0.658 0.641
0.889
0.864
0.840
0.800
0.718 0.706
0.624 0.609 0.593
0.772 0.751
0.731
0.694
4
0.855
0.675
0.823
0.822 | 0.784
0.792 0.763 0.735 0.708
0.579 0.564 0.551| 0.537 | 0.524 0512
0.683
0.041
0.659
0.593
0.564| 0.535
5
0.636 0.613 0.592 0572 0.552 0.534 0.516 0.499 0.482 0.467 0.451
0.713 0.681 0.650
0.747
0.746 0.705
0.567
0.543 0.519 0.497 0.476 0.456
0.480 0.456 0.432 0.410 0.390
0.425 0.400
0.376 0.351
0.437 0.423 0.410
0.370 0.3550.341 0.328
0.289 0.275 0.262
0.021
0.790
0.760 0.711
0.731 0.677
0.703 0.645 0,592
0.437 0.419
0.370 0.352 0.335 0.319
0.666
0.630
0.665 0.623 0.583
0.627 0.582 0.540 | 0,502
0.500
0.508 0.463
0.596
0.419
0.402 0.386
O.J04
0.513
0.507
0.547
0.303
0.482
0.434 0.404
8.
0.452
0.376 0.354 0 333 o 214
0.289
0 206
0270
0.467
0.327
0.308 0.284
0.270 0.247
0.544
0.460
0.424 0.391
| U.191 | 0.179 |0.168
0.361
0.352 0.322 | 0.295
0.317 0.287
0,333
0.225 0.209 | 0.194 0.180 0.167 0.155 0.144 0.134
0.208 0.191 0.176 0.162 0.149 0.137 0.126 0.116 0.107
0.215 0.195 0.178 0.162 0.148 0.135 0.123 0.112 0.103 0.094 0.086
0.137 0.124 0.112 0.102 0.092 0.083 0.076 0.069
10
11
0.263
0.205
0.227
0.676
0.614 |
0,585 0.527
0.557 0.497 0.444
0.558 0.508
0.422
0.243
2
0.386
0.650
1770
0.208
0.178
0.208 0.187 0.168 0.152
0.475
0.350
0.350
0.397 0.356 0.319 0.286 0.257
0.429
0.388
0.261
0.237
12
0.625
0.195
0.530
0.326
0.231
13
0.469
0.100
0.163 0.145
0.601
0.530
0.415
0.368
0.137
0.258 0.229
0.232 0.205
0.209 0,183
0.188 0.163
0.290
0,204
U.520
0.299
0.299
0.275
0.577 0,505 0.388
0.182
0.130 | 0.116 0.104 0.093 0.084 0.075 0.068
0.110
0.099
0.104
0.088
14
0.061
0.055
0.069 0.062 0.055 0.049 0.044
0.045 0.040 0.035
0.054 0.047 0.042 0.036 0.032 0.028
0.442
0.340
0.263
0.181
0.141 0.125 0.111
0.160
0.140 | 0.123
15
0.555
0.481
0.417
0.362
0.315
0.239
0.160
0.108 0.095 0.084 0.074 0.065 0.057 0.051
0.093 |0.081
0.080 0.069
16
0.534
0.458
0.394 0.339
0.292
0.252
0.218
0.188
0.141
0.123 | 0.107
0.071 | 0.062
0.060 0.052 0.045 0.039 0.034 0.030
0.051 |
0.270
0.270
O 199
0.198
17
0.513
0.494
0.436 0.371
0.317
0.231
0.198 0.170 0.146 0.125 0.108 0.093 0.080
0.170
0.153
0.026 0.023
0.028 0.0240.021 0.018
0.027 | 0.023 0.020 | 0.017 | 0.014
18
0.416
0.350
0.296
0.250
0.212
0.180
0.130
0 130
0.095 0.081
0.098 0.083 0.070
0.111
0.212
0.194
0.178
0.180
0.164
0.069
0.059
0.044 0.038
0.032
19
0.475
0.396
0.331
0.277
0.232
0.138
0.116
0.060 0.051
0.043
0.138
0.043
0.037
0.031
0.456
0.258 0.215
0.242 0.199
0.226 0.184
20
0.377
0.312
0.149
0.135
0.104
0.051
0.044
0.124
0.087
0.073 0.061
0.178
0.164
0.037 | 0.031 0.026 0.022 | 0.019 | 0.016 0.014 0.012
0.026 0.022 0.018 0.015 | 0.013 0.011
21
0.439
0.359
0.294
0.112 | 0.093
0.037 0.031
0.032 0.026 0.022 0.018 0.015 0.013 0.011
0.027 | 0.022
0.077 0.064
0.053
0.009
22
0.422
0.342
0.278 |
0.184 0.150
0.123 | 0.101
0.083
0.056 | 0.046
0.049
0.068
0.038
0.033
0.028
0.024 0.020 0.016 0.013
0.009 0.007
0.018 | 0.015 0.012 0.010 0.009 0.007 0.006
0.007 | 0.006 | 0.005
0.007 | 0.006 0.005 0.004
0.004 0.003
0.004 | 0.003 0.002
0.004 0.003 0.002 0.002
0.002 0.002 0.002
0.003 0.003 0.002 0.002 0.001
23
O 406
0.406
0.326
0210
0.310
0.170 | 0.138
0.158
O 146
0.262 | 0.211
0.112
0.091
0.074
0.060
0.040
O 200
0.390
0.102 | 0.082
0,074
24
0.247
| 0.197
0.126
0.066
0.053
0.043
0.035
0.023
0.019
0.015
0.013 0.010 | 0.008
0.047
0.038 0.030
0.184
O 172
0.146
O 135
25
0.375
0.295
0.233
0.116
0.092
0.059
0.010 0.009
0.084
0.076 | 0.060
0.054
0.017
0.014 0.011
0.012 |0.010
0.011 | 0.009 0.007 0.006
0.006 | 0.005
0.042 | 0.033
0.026
0.021
0.106
0.098
0.066 0.053
0.172
O161
26
0.281
0.220
0.135
0.125
0.361
0.268
O 207
0.207
0.047
0.037
0.029
0.023
0.018
0.009 0.007
0.347
0.322
27
0.161
0.042 | 0.033 0.026 0.020
0.048 0.037 0.029 0.022 0.017
28
0.333
0.255
0.196
0.150
0.116
0.090 0.069
0.016
0.008
0.006 0.005
29
0.321
0.243
0.185
0.141
0.107
0.082
0.063
0.014 0.011
0.008
0.006
0.005 0.004 0.003
0.015 0.012 0.009 0.007 0.005 0.004
0.099 | 0.075 0.057 | 0.044 0.033 0.026
0.008
0.020
30
0.308
0.231
0.174 0.131
0.208
0.005 0.004 0.003 | 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000
0.142 | 0.097 | 0.067 0.046 | | 0.015 0.011
0.032 0.022
40
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