Which item(s) in the income statement shown above will not affect cash flows?

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:

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:

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:

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:
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
  

1.

Which item(s) in the income statement shown above will not
affect cash flows? (You may select more than one answer.
Click the box with a check mark for correct answers and click to
empty the box for the wrong answers.)

  

Sales

Variable expenses

Advertising, salaries, and other
fixed out-of-pocket costs expenses

Depreciation expense

2.

What are the project’s annual net cash inflows?

3.
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.)

4.
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.)

5.

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.)

  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
  

1.

Which item(s) in the income statement shown above will not
affect cash flows? (You may select more than one answer.
Click the box with a check mark for correct answers and click to
empty the box for the wrong answers.)

  

Sales

Variable expenses

Advertising, salaries, and other
fixed out-of-pocket costs expenses

Depreciation expense

2.

What are the project’s annual net cash inflows?

3.
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.)

4.
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.)

5.

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.)

  Sales

$
2,867,000
  
  Sales $ 2,867,000
  
  Variable
expenses

1,125,000
  
  Variable
expenses 1,125,000
  

  Contribution
margin

1,742,000
  
  Contribution
margin 1,742,000
  
  Fixed expenses:

  Fixed expenses:
  Advertising,
salaries, and other
    fixed out-of-pocket costs
$
706,000

  Advertising,
salaries, and other
    fixed out-of-pocket costs $ 706,000
  Depreciation

465,000

  Depreciation 465,000

  Total fixed
expenses

1,171,000
  
  Total fixed
expenses 1,171,000
  

  Net operating
income

$
571,000
  
  Net operating
income $ 571,000
  

1.

Which item(s) in the income statement shown above will not
affect cash flows? (You may select more than one answer.
Click the box with a check mark for correct answers and click to
empty the box for the wrong answers.)

  

Sales

Variable expenses

Advertising, salaries, and other
fixed out-of-pocket costs expenses

Depreciation expense

2.

What are the project’s annual net cash inflows?

3.
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.)

4.
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.)

5.

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.)

1.

Which item(s) in the income statement shown above will not
affect cash flows? (You may select more than one answer.
Click the box with a check mark for correct answers and click to
empty the box for the wrong answers.)

  

Sales

Variable expenses

Advertising, salaries, and other
fixed out-of-pocket costs expenses

Depreciation expense

2.

What are the project’s annual net cash inflows?

3.
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.)

4.
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.)

5.

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.)

1.

Which item(s) in the income statement shown above will not
affect cash flows? (You may select more than one answer.
Click the box with a check mark for correct answers and click to
empty the box for the wrong answers.)

  

Sales

Variable expenses

Advertising, salaries, and other
fixed out-of-pocket costs expenses

Depreciation expense

2.

What are the project’s annual net cash inflows?

3.
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.)

4.
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.)

5.

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.)

1.

Which item(s) in the income statement shown above will not
affect cash flows? (You may select more than one answer.
Click the box with a check mark for correct answers and click to
empty the box for the wrong answers.)

  

Sales

Variable expenses

Advertising, salaries, and other
fixed out-of-pocket costs expenses

Depreciation expense

2.

What are the project’s annual net cash inflows?

3.
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.)

4.
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.)

5.

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.)

1.

Which item(s) in the income statement shown above will not
affect cash flows? (You may select more than one answer.
Click the box with a check mark for correct answers and click to
empty the box for the wrong answers.)

1.
Which item(s) in the income statement shown above will not
affect cash flows? (You may select more than one answer.
Click the box with a check mark for correct answers and click to
empty the box for the wrong answers.)
(You may select more than one answer.
Click the box with a check mark for correct answers and click to
empty the box for the wrong answers.)

  
  

Sales

Variable expenses

Advertising, salaries, and other
fixed out-of-pocket costs expenses

Depreciation expense

2.

What are the project’s annual net cash inflows?

3.
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.)

4.
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.)

5.

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.)

Sales

Variable expenses

Advertising, salaries, and other
fixed out-of-pocket costs expenses

Depreciation expense

2.

What are the project’s annual net cash inflows?

3.
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.)

4.
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.)

5.

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.)

Sales

Variable expenses

Advertising, salaries, and other
fixed out-of-pocket costs expenses

Depreciation expense

2.

What are the project’s annual net cash inflows?

3.
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.)

4.
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.)

5.

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.)

Sales

Variable expenses

Advertising, salaries, and other
fixed out-of-pocket costs expenses

Depreciation expense

2.

What are the project’s annual net cash inflows?

3.
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.)

4.
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.)

5.

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.)

Sales
Sales

Variable expenses
Variable expenses

Advertising, salaries, and other
fixed out-of-pocket costs expenses
Advertising, salaries, and other
fixed out-of-pocket costs expenses

Depreciation expense

2.

What are the project’s annual net cash inflows?

3.
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.)

4.
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.)

5.

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.)

Depreciation expense

2.

What are the project’s annual net cash inflows?

3.
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.)

4.
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.)

5.

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.)

2.

What are the project’s annual net cash inflows?

3.
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.)

4.
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.)

5.

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.)

2.

What are the project’s annual net cash inflows?

3.
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.)

4.
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.)

5.

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.)

2.

What are the project’s annual net cash inflows?

3.
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.)

4.
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.)

5.

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.)

2.
What are the project’s annual net cash inflows?

3.
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.)

4.
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.)

5.

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.)

3.
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.)

3.
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.)

3.
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.)
3. 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.) (Use the
appropriate table to determine the discount factor(s) and final
answer to the nearest dollar amount.)

4.
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.)

4.
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.)

4.
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.)
4. 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.) (Use the appropriate table to determine the discount
factor(s) and final answer to the nearest dollar
amount.)

5.

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.)

5.

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.)

5.

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.)

5.
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.)
(Use the
appropriate table to determine the discount factor(s) and final
answer to the nearest dollar amount.)

1)Which item(s) in the income statement shown above will not
affect cash flows?
Depreciation expense
Note : Depreciation expense is non cash expenses
2)
Project’s annual net cash inflows =  Net operating
income +  Depreciation
Project’s annual net cash inflows = 571000+465000
Project’s annual net cash inflows = 1036000
3)
Present value of the project’s annual net cash inflows =
Project’s annual net cash inflows *PVIFA(14%,5)
Present value of the project’s annual net cash inflows =
1036000*3.43308
Present value of the project’s annual net cash inflows =
3,556,671
4)
Present value of the equipment’s salvage value at the end of
five years = Salvage Value*PVIF(14%,5)
Present value of the equipment’s salvage value at the end of
five years = 400000*0.51937
Present value of the equipment’s salvage value at the
end of five years = 207,748
5)
Project’s net present value = -Initial Investment + Present
value of the project’s annual net cash inflows + Present value of
the equipment’s salvage value at the end of five years
Project’s net present value = -2725000+ 3556671 + 207748
Project’s net present value = $ 1,039,419

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