Required information The Foundational 15 (Algo) [LO14-1, LO14-2, LO14-3, LO14-5, LO14-6] Skip to question [The...
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Required information The Foundational 15 (Algo) [LO14-1, LO14-2, LO14-3, LO14-5, LO14-6] Skip to question [The following information applies to the questions displayed below.] Cardinal Company is considering a five-year project that would require a $2,955,000 investment in equipment with a useful life of five years and no salvage value. The companys discount rate is 18%. The project would provide net operating income in each of five years as follows: Sales $ 2,865,000 Variable expenses 1,015,000 Contribution margin 1,850,000 Fixed expenses: Advertising, salaries, and other fixed out-of-pocket costs $ 750,000 Depreciation 591,000 Total fixed expenses 1,341,000 Net operating income $ 509,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table. Foundational 14-7 (Algo) 7. What is the projects payback period? (Round your answer to 2 decimal places.)
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