Paper , Order, or Assignment Requirements

Cardinal Company is considering a project that would require a $2,875,000 investment in equipment with a useful life of five years. At the end of five years, the project would terminate and the equipment would be sold for its salvage value of $300,000. The company’s discount rate is 16%. The project would provide net operating income each year as follows:

Sales $ 2,871,000
Variable expenses 1,018,000

Contribution margin 1,853,000
Fixed expenses:
Advertising, salaries, and other
fixed out-of-pocket costs $ 753,000
Depreciation 515,000

Total fixed expenses 1,268,000

Net operating income $ 585,000

What are the project’s annual net cash inflows?
What is the present value of the project’s annual net cash inflows? (Use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.)
What is the present value of the equipment’s salvage value at the end of five years? (Use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.)
What is the project’s net present value? (Use the appropriate table to determine the discount factor(s) and final answer to the nearest dollar amount.)
What is the project profitability index for this project?