High Flyers 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 2 balloons)	$500,000
Useful life	5 years
Salvage Value	$150,000
Annual net income generated from additional flights	$60,000
Cost of Capital for High Flyers	11%

Help High Flyers evaluate this project by calculating:

1. Use excels IRR function to determine the IRR. Was your estimate close?

2. Payback Period

3. Simple Rate of Return

4. Assume that High Flyers has the following guidelines for its screening preferences:

Cost of Capital 11%

IRR of 12%

Payback period of 5 years or less

Simple rate of return 10%

Based on these guidelines, would this project make the cut? Explain.