Lindas Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows: Initial investment (2 limos) $ 660,000 Useful life 10 years Salvage value $ 200,000 Annual net income generated 53,460 LLTs cost of capital 13 % Assume straight line depreciation method is used.

Required: Help LLT evaluate this project by calculating each of the following:

1. Accounting rate of return. (Round your percentage answer to 1 decimal place.)

2. Payback period. (Round your answer to 2 decimal places.)

3. Net present value. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Cash Outflows and negative amounts should be indicated by a minus sign. Round your "Present Values" to the nearest whole dollar amount.)

4. Without making any calculations, determine whether the IRR is more or less than 13%.