assist 8. What is the project's simple rate of return for each of the five years? (Round your answer to 2 decimal places.)Simple rate of returnShow Transcribed Text%Not present valueC13. 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 50%. What was the project's actual net present value? (Negative amount should be indicated by aminus sign. Round intermediate calculations and final answer to the nearest whole dollar amount.) Cardinal Company is considering a five-year project that would require a $2,765,000 investment in equipment with auseful life of five years and no salvage value. The company's discount rate is 14%. The project would provide net operatingincome in each of five years as follows:SalesVariable expensesContribution marginFixed expenses:Advertising, salaries, and other fixedout-of-pocket costsDepreciationTotal fixed expensesNet operating income$ 670,000553,000$ 2,851,0001,150,0001,701,0001,223,000$ 478,000

Solution: Simple rate of return = Net operating income / Initial investment Net present value =…

Cardinal Company is considering a five-year project that would require a $2,765,000 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 $ 670,000 553,000 $ 2,851,000 1,150,000 1,701,000 1,223,000 $ 478,000

Cardinal Company is considering a five-year project that would require a $2,765,000 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 $ 670,000 553,000 $ 2,851,000 1,150,000 1,701,000 1,223,000 $ 478,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 10E: Roberts Company is considering an investment in equipment that is capable of producing more...

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