Question
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
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 | $ | 190,000 | |||||
Useful life | $ | 10 | years | ||||
Salvage value | 20,000 | ||||||
Annual net income generated | $ | 4,400 | |||||
FCA's cost of capital | 6 | % | |||||
Assume straight line depreciation method is used.
References
Section BreakPA11-4 Calculating Accounting Rate of Return, Payback Period, Net Present Value, Estimating Internal Rate of Return [LO 11-1, 11-2, 11-3, 11-4]
5.
value: 1.11 points
Required information
PA11-4 Part 1
Required: Help FCA evaluate this project by calculating each of the following: 1. Accounting rate of return. (Round your answer to 2 decimal places.)
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