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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 (2 limos) Useful life
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 $ 660,000 10 years $ 200,000 $ 53,460 13% Assume straight line depreciation method is used. Required: Help LLT evaluate this project by calculating each of the following: 4. Accounting rate ofretum. 2. Rayback period 3. Net present value. 4. Without making any calculations, determine whether the IRR is more or less than 10%. 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) Present Value Table or Calculator Function: Cash Inflow (for Next 10 Years) Table Factor Present Value Table or Calculator Function: Cash Inflow (for 10th Year) Table Factor Present Value Total Net Present Value
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