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 is 14%. The project would provide net operating income in each of five years as follows: Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out- of-pocket costs Depreciation Total fixed expenses Net operating income Click here to view Exhibit 148-1 and Exhibit 148-2. to determine the appropriate discount factor(s) using table. Answer is complete but not entirely correct. $(1,585,143) Net present value What is the project's net present value? (Round final answer to the nearest whole dollar amount.) $ 735,000 595,000 Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out- of-pocket costs $ 2,735,000 1,000,000 1,735,000 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 is 14%. The project would provide net operating income in each of five years as follows: 1,330,000 $ 405,000 $ 735,000 595,000 Stability index $ 2,735,000 1,000,000 1,735,000 Depreciation Total fixed expenses Net operating income Click here to view Exhibit 148-1 and Exhibit 148-2. to determine the appropriate discount factor(s) using table. 1,330,000 $ 405,000 What is the profitability index for this project? (Round your answer to 2 decimal places.)

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
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[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 is 14%. The project would provide net operating
income in each of five years as follows:
Sales
Variable expenses
Contribution margin
Fixed expenses:
Advertising, salaries, and other fixed out-
of-pocket costs
Depreciation
Total fixed expenses
Net operating income
Click here to view Exhibit 148-1 and Exhibit 148-2. to determine the appropriate discount factor(s) using table.
Answer is complete but not entirely correct.
Net present value
$(1,585,143)
$ 735,000
595,000
4. What is the project's net present value? (Round final answer to the nearest whole dollar amount.)
Required information
(The following information applies to the questions displayed below.]
Sales
Variable expenses
Contribution margin
$ 2,735,000
1,000,000
1,735,000
Fixed expensest
Advertising, salaries, and other fixed out-
of-pocket costs
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 is 14%. The project would provide net operating
income in each of five years as follows:
1,330,000
$ 405,000
$ 735,000
595,000
Profitability index
$ 2,735,000
1,000,000
1,735,000
Depreciation
Total fixed expenses
Net operating income
Click here to view Exhibit 148-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table.
1,330,000
$ 405,000
5. What is the profitability index for this project? (Round your answer to 2 decimal places.)
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 is 14%. The project would provide net operating income in each of five years as follows: Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and other fixed out- of-pocket costs Depreciation Total fixed expenses Net operating income Click here to view Exhibit 148-1 and Exhibit 148-2. to determine the appropriate discount factor(s) using table. Answer is complete but not entirely correct. Net present value $(1,585,143) $ 735,000 595,000 4. What is the project's net present value? (Round final answer to the nearest whole dollar amount.) Required information (The following information applies to the questions displayed below.] Sales Variable expenses Contribution margin $ 2,735,000 1,000,000 1,735,000 Fixed expensest Advertising, salaries, and other fixed out- of-pocket costs 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 is 14%. The project would provide net operating income in each of five years as follows: 1,330,000 $ 405,000 $ 735,000 595,000 Profitability index $ 2,735,000 1,000,000 1,735,000 Depreciation Total fixed expenses Net operating income Click here to view Exhibit 148-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table. 1,330,000 $ 405,000 5. What is the profitability index for this project? (Round your answer to 2 decimal places.)
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