1. Assume a postaudit showed that all estimates (including total sales) were exactly correct except...
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1. 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 projects actual net present value?
2. 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 projects actual simple rate of return?
Cardinal Company is considering a five-year project that would require a $2,500,000 investment in equipment witha 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 Variable expenses Contribution margin Pixed expenses: $2,853,000 1,200,000 1,653, 000 Advertising, salaries, and other fixed out-of-pocket costs Depreciation $790,000 500,000 Total fixed expenses Net operating income 1,290,000 $ 363,000
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