Falcon Crest Aces (FCA), Inc., is considering the purchase of a small plane to use in its wing-walking demonstrations and aerial tour business. Various information about the proposed investment follows:

Initial investment	$	180,000
Useful life	$	10	years
Salvage value		20,000
Annual net income generated	$	4,200
FCA's cost of capital		6	%

Assume straight line depreciation method is used. Help FCA evaluate this project by calculating each of the following: 1. Accounting rate of return.

2. Payback period.

3. Net present value (NPV).

4. Recalculate FCA's NPV assuming the cost of capital is 3% percent.