Lindas Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows:

Initial investment (2 limos)	$	660,000
Useful life		10	years
Salvage value	$	200,000
Annual net income generated		53,460
LLTs cost of capital		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.)

2. Payback period. (Round your answer to 2 decimal places.) 3. Net present value. (Complete Chart below) (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 round 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 calculation function:

Cash Outflow (the beginning of the year):

n=

i= %

Present value:

Table or calculator function:

Cash inflow for next 10 years:

n=

i= %

Table factor:

Present value:

Table or Calculator function:

Cash inflow for 10^th year

n=

i= %

Table factor:

Present Value:

Total net present value:

4. Without making any calculations, determine whether the IRR is more or less than 13%.