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11 March, 17:17

Cardinal Company is considering a five-year project that would require a $2,890,000 investment in equipment with a useful life of five years and no salvage value. The company's discount rate is 12%. The project would provide net operating income in each of five years as follows:

Sales $ 2,739,000

Variable expenses 1,100,000

Contribution margin 1,639,000

Fixed expenses:

Advertising, salaries, and

other fixed out-of-pocket costs $ 641,000

Depreciation 578,000

Total fixed expenses 1,219,000

Net operating income $ 420,000

A. What are the project's annual net cash inflows?

B. What is the project's net present value?

C. What is the project profitability index for this project?

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  1. 11 March, 17:21
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    What are the project's annual net cash inflows?
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