PA$11-1($Algo$)$ Calculating Accounting Rate of Return, Payback Period, Net Present Value, Estimating Internal Rate of Return $[$LO $11-1,11-2,11-3,11-4]$

Balloons By Sunset $($BBS$)$ is considering the purchase of two new hot air balloons so that it can expand its desert sunset tours. Various information about the proposed investment follows: $($Future Value of $$1,$ Present Value of $$1,$ Future Value Annuity of $$1,$ Present Value Annuity of $$1.)$

Note: Use appropriate factor$($s$)$ from the tables provided.

Initial investment $($for two hot air balloons$)$ $ $495,000$

Useful life $10$ years

Salvage value $ $45,000$

Annual net income generated $ $42,570$

BBS$$s cost of capital $11\%$

Assume straight line depreciation method is used.

Required:

Help BBS evaluate this project by calculating each of the following:

Accounting rate of return.

Note: Round your answer to $2$ decimal places.

Payback period.

Note: Round your answer to $2$ decimal places.

Net present value $($NPV$).$

Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.

Recalculate the NPV assuming BBS$\text{'}$s cost of capital is $14$ percent.

Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.