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Business, 16.12.2019 22:31 florenciaaxell4042

Cardinal company is considering a project that would require a $2,725,000 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 $400,000. the company’s discount rate is 14%. the project would provide net operating income each year as follows:

sales $ 2,867,000
variable expenses 1,125,000
contribution margin 1,742,000
fixed expenses:
advertising, salaries, and other
fixed out-of-pocket costs $ 706,000
depreciation 465,000
total fixed expenses 1,171,000
net operating income $ 571,000

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