! 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
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 17P
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