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 16%. The project would provide net operating income in each of five years as follows: Sales Variable expenses $ 2,871,000 1,018,000 1,853,000 Contribution margin Fixed expenses: out-of-pocket costs Advertising, salaries, and other fixed Depreciation. Total fixed expenses $ 753,000 591,000 1,344,000 $ 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 12-6 (Algo) 6. What is the project's internal rate of return? Project's internal rate of return %
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 16%. The project would provide net operating income in each of five years as follows: Sales Variable expenses $ 2,871,000 1,018,000 1,853,000 Contribution margin Fixed expenses: out-of-pocket costs Advertising, salaries, and other fixed Depreciation. Total fixed expenses $ 753,000 591,000 1,344,000 $ 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 12-6 (Algo) 6. What is the project's internal rate of return? Project's internal rate of return %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text: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 16%. The project would provide net operating
income in each of five years as follows:
Sales
Variable expenses
$ 2,871,000
1,018,000
1,853,000
Contribution margin
Fixed expenses:
out-of-pocket costs
Advertising, salaries, and other fixed
Depreciation.
Total fixed expenses
$ 753,000
591,000
1,344,000
$ 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 12-6 (Algo)
6. What is the project's internal rate of return?
Project's internal rate of return
%
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