Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows: Initial investment (2 limos) Useful life Salvage value Annual net income generated LLT's cost of capital $ 960,000 10 years $ 120,000 $ 82,560 134 Assume straight line depreciation method is used Required: Help LLT evaluate this project by calculating each of the following: 1. Accounting rate of return. 2. Payback period. 3. Net present value. 4. Without making any calculations, determine whether the IRR is more or less than 13% Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines, Various information about the proposed investment follows: Initial investment (2 limos) Useful life Salvage value Annual net income generated LLT'S cost of capital $ 960,000 10 years $ 120,000 $ 82,560 134 Assume straight line depreciation method is used. Required: Help LLT evaluate this project by calculating each of the following: 1. Accounting rate of return. 2. Payback period 3. Net present value. 4. Without making any calculations, determine whether the IRR is more or less than 13%. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Calculate accounting rate of return. (Round your answer to 1 decimal place.) Accounting Rate of Return 15,3% Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines, Various information about the proposed investment follows: $ 960,000 Initial investment (2 limos) Useful life Salvage value Annual net income generated LLT's cost of capital 18 years $ 120,000 $ 82,560 134 Assume straight line depreciation method is used. Required: Help LLT evaluate this project by calculating each of the following: 1. Accounting rate of return. 2. Payback period 3. Net present value. 4. Without making any calculations, determine whether the IRR is more or less than 13% Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required Calculate payback period. (Round your answer to 2 decimal places.) Payback Poriod 5.76 years (Required 1 Required 3 > Required 1 Required 2 Required 3 Required 4 Calculate 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. Cash Outflows and negative amounts should be indicated by a minus sign. Round your "Present Values" to the nearest whole dollar amount.) Show less Table or Calculator Function: Cash Outflow (Beginning of the Year) n i % Present Value Table or Calculator Function: Cash Inflow (for Next 10 years) n % Table Factor Present Value Table or Calculator Function: Cash Inflow (for 10th Year) no 1 = % Table Factor Present Value Total Net Present Value Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows: Initial investment (2 limos) Useful life Salvage value Annual net income generated LLT's cost of capital $ 960,000 10 years $ 120,000 $ 82,560 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. 2. Payback period, 3. Net present value. 4. Without making any calculations, determine whether the IRR is more or less than 13%. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Without making any calculations, determine whether the IRR is more or less than 13%. IRR
