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

Initial investment(2 limos) $1,620,000

Useful life 10 years

Salvage value $140,000

Annual net income generated 157,140

LLTs 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.( round to one decimal place)

2. Payback period.(round to two decimal places)

3. Net present value