Cardinal Company is considering a five-year project that would require a $2,915,000 investment in equipment...
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Cardinal Company is considering a five-year project that would require a $2,915,000 investment in equipment with a useful life of five years and no salvage value. The companys discount rate is 12%. The project would provide net operating income in each of five years as follows:
| Sales | $ 2,746,000 | |
|---|---|---|
| Variable expenses | 1,126,000 | |
| Contribution margin | 1,620,000 | |
| Fixed expenses: | ||
| Advertising, salaries, and other fixed out-of-pocket costs | $ 615,000 | |
| Depreciation | 583,000 | |
| Total fixed expenses | 1,198,000 | |
| Net operating income | $ 422,000 |
13. 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? (Negative amount should be indicated by a minus sign. Round intermediate calculations and final answer to the nearest whole dollar amount.)
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