Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows: Initial investment (2 limos) $1,320,000 Useful life 10 years Salvage value $ 130,000 Annual net income generated $ 121,440 LLT's cost of capital 15% 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 15%. 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 % Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows: Initial investment (2 limos) $1,320,000 Useful life 10 years Salvage value $ 130,000 Annual net income generated $ 121,440 LLT's cost of capital 15% 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 15%. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Calculate payback period. (Round your answer to 2 decimal places.) Payback Period years Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows: Initial investment (2 limos) $1,320,000 Useful life 10 years Salvage value $ 130,000 Annual net income 121,440 generated LLT's cost of 15% capital 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 15%. Complete this question by entering your answers in the tabs below. Required Required Required Required 1 2 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) n= 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 $1,320,000 (2 limos) Useful life 10 years Salvage value $ 130,000 Annual net income $ 121,440 generated LLT's cost of 15% capital 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 15%. Complete this question by entering your answers in the tabs below. 1 4 Required Required Required Required 2 Without making any calculations, determine whether the IRR is more or less than 15%. IRR
