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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 $ 960,000 10 years S 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. (Round your percentage answer to 1 decimal place.) Accounting Rate of Return% 2. Payback period. (Round your answer to 2 decimal places.) Payback Period Years 2. Payback period. (Round your answer to 2 decimal places.) Years Payback Period 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 roune intermediate calculations. Cash Outflows and negative amounts should be indicated by a minus sign. Round your "Present Values" to the nearest whole dollar amount.) Table or Calculator Function: resent Value of S1 Cash Outflow (Beginning of the Year) 960,000 Present Value Table or Calculator Function Cash Inflow (for Next 10 Years) n a 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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