Question
Lindas Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows: Initial investment (2 limos) $ 840,000
Lindas Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows:
| Initial investment (2 limos) | $ | 840,000 | |||||
| Useful life | 10 | years | |||||
| Salvage value | $ | 120,000 | |||||
| Annual net income generated | 70,560 | ||||||
| LLTs cost of capital | 14 | % | |||||
Assume straight line depreciation method is used. Required: Help LLT evaluate this project by calculating each of the following:
What is the payback period? (Round your answer to 2 decimal places.)
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Intermediate Accounting
Authors: kieso, weygandt and warfield.
14th Edition
9780470587232, 470587288, 470587237, 978-0470587287
