Cardinal Company is considering a project that would require a $2,805,000 investment in equipment with a useful life of five y
the end of five years, the project would terminate and the equipment would be sold for its salvage value of $400,000. The com
discount rate is 14%. The project would provide net operating income each year as follows:
Sales
Variable expenses
Contribution margin
Fixed expenses:
Advertising, salaries, and other fixed out-of-pocket costs $642,000
Depreciation
Total fixed expenses
Net operating income
$2,741,000
1,125,000
1,616,000
481,000
1,123,000
$ 493,000
Click here to view Exhibit 10-1 and Exhibit 10-2, to determine the appropriate discount factor(s) using tables.
Required:
What is the project's net present value? (Round discount factor(s) to 3 decimal places, intermediate and final answers to the
dolar amount.)
Net present value
