Linda$$s Luxury Travel $($LLT$)$ is considering the purchase of two Hummer limousines$.$ Various information about the proposed investment follows:

Initial investment $(2$ limos$)$ $ $1,260,000$

Useful life $10$ years

Salvage value $ $130,000$

Annual net income generated $ $114,660$

LLT$$s cost of capital $14$

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 $$1,$Present Value of $$1,$ Future Value Annuity of $$1,$ Present Value Annuity of $$1.)$

Note: Use appropriate factor$($s$)$ from the tables provided.

Without making any calculations, determine whether the IRR is more or less than $14\%.$