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Linda s Luxury Travel ( LLT ) is considering the purchase of two Hummer limousines . Various information about the proposed investment follows: Initial investment
Lindas Luxury Travel LLT is considering the purchase of two Hummer limousines Various information about the proposed investment follows:
Initial investment limos $
Useful life years
Salvage value $
Annual net income generated $
LLTs cost of capital
Assume straight line depreciation method is used.
Required:
Help LLT evaluate this project by calculating each of the following:
Accounting rate of return.
Payback period.
Net present value. Future Value of $Present Value of $ Future Value Annuity of $ Present Value Annuity of $
Note: Use appropriate factors from the tables provided.
Without making any calculations, determine whether the IRR is more or less than
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