Balloons By Sunset (BBS) is considering the purchase of two new hot air balloons so that it can expand its desert sunset tours. Various information about the proposed investment follows:

Initial investment (for two hot air balloons)	$	340,000
Useful life		7	years
Salvage value	$	60,000
Annual net income generated	$	27,200
BBSs cost of capital		12	%

Assume straight line depreciation method is used.

Required:

Help BBS evaluate this project by calculating each of the following:

1.	Accounting rate of return. (Round your answer to 1 decimal place.)

2.	Payback period. (Round your answer to 2 decimal places.)
	3. Net present value (NPV). (Future Value of $1, Present Value of $1, Future Value Annuity of $1,Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign.) Net Present Value = ????????

4.	Recalculate the NPV assuming BBS's cost of capital is 20 percent. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign.) Net Present Value = ????????????

TABLE 11.2A Present Value of $1 0.9639 0.9290 0.8954 0.8631 0.9259 0.8573 0.7938 0.7350 0.9709 0.9426 0.9592 0.9201 0.8826 0.8466 0.8121 0.9524 0.9070 0.8638 0.8227 0.7835 0.7462 0.9804 0.9346 0.8734 0.9246 0.8890 0.8548 0.8219 0.7903 0.7599 0.7307 0.7026 0.6756 2 3 0.9423 0.9238 0.9057 0.8880 0.8885 0.8626 0.8375 0.8900 0.8396 0.7921 0.7473 0.7629 0.6663 0.6227 0.5820 0.5439 0.5083 0.2584 0.6302 0.5835 0.5403 0.5002 0.6651 0.6274 0.8535 0.8368 0.8203 0.6730 0.7894 0.7664 8 0.7449 0.6768 0.6876 0.6595 10 20 0.6920 0.4789 0.3769 0.8772 0.7695 0.6750 0.5921 0.9009 0.8000 0.9091 0.8264 0.8929 0.7972 0.8696 0.8333 0.6944 0.4823 0.3349 3 0.6931 0.7722 0.7084 0.6499 0.6575 0.6587 0.5935 0.6355 0.5674 0.5066 0.4523 0.4039 0.3606 0.3220 0.6830 0.6209 0.5645 0.4096 0.3277 0.4972 0.4323 0.3759 0.3269 0.2843 0.2472 0.5428 0.4803 0.3762 0.2946 0.5470 0.3996 0.2097 0.4339 0.3909 0.3522 8 0.4665 0.2697 0.0728 0.4224 0.3855 20 0.0868 0.0261