PA11-1 (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)) Useful life Salvage value Annual net income generated BBS's cost of capital Assume straight line depreciation method is used. Required: Help BBS evaluate this project by calculating each of the following: 1. Accounting rate of return. Note: Round your answer to 2 decimal places. 2. Payback period. Note: Round your answer to 2 decimal places. 3. Net present value (NPV). $ 354,000 8 years $ 50,000 $ 32,568 226 Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar. 4. Recalculate the NPV assuming BBS'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. Answer is complete but not entirely correct. Naturn to qu Userui 10 Salvage value Annual net income generated BBS's cost of capital Assume straight line depreciation method is used. Required: Help BBS evaluate this project by calculating each of the following: 1. Accounting rate of return. Note: Round your answer to 2 decimal places. 2. Payback period. Note: Round your answer to 2 decimal places. 3. Net present value (NPV). $ 50,000 $ 32,568 116 Return years Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar. 4. Recalculate the NPV assuming BBS'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. Answer is complete but not entirely correct. 1. Accounting rate of return 9.20 % 2. Payback period 5.02 years 3. Net present value $ 30,652 x 4. Net present value assuming 14% cost of capital $ (9,117) TABLE 11.1A Future Value of $1 Periods 21 31 0 1.0000 1.0000 1 2 3 4 5 1.0200 1.0404 1.0609 1.0612 1.0927 1.0824 1.1255 1.1041 1.1593 1.0300 6 7 8 9 1.3928 1.4233 1.4544 10 1.4450 1.4802 1.5162 3.75% 41 4.251 1.0000 1.0000 1.0000 1.0375 1.0400 1.0425 1.0764 1.0816 1.0868 1.1025 1.1236 1.1449 1.1664 1.1168 1.1249 1.1330 1.1576 1.1910 1.2250 1.2597 1.1587 1.1699 1.1811 1.2155 1.2625 1.3108 1.2021 1.2167 1.4693 1.2313 1.2763 1.3382 1.4026 1.1262 1.1941 1.2472 1.2653 1.2837 1.3401 1.41851 1.5007 1.5869 1.1487 1.2299 1.2939 1.3159 1.3382 1.4071 1.5036 1.7138 1.6058 1.1717 1.2668 1.3425 1.3686 1.3951 1.4775. 1.1951 1.3048 1.2190. 1.3439 51 61 1.0000 71 1.0000 81 1.0000 1.0000 1.0500 1.0600 1.0700 1.0800 1.3605 1.5938 1.7182 1.8509 1.5513 1.6895. 1.8385 1.9990 1.6289 1.7906 1.9672 2.1589 20 1.4859 1.8061 2.0882 2.1911 2.2989 2.6533 3.2071 3.8697 4.6610 Periods 91 10% 118 12 138 14% 151 201 251 0 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 123456789UQ 1.0900 1.1000 1.1100 1.1200 1.1300 1.1400 1.1500 1.2000 1.2500 1.1881 1.2100 1.2321 1.2544 1.2769 1.2996 1.3225 1.4400 1.5625 1.2950 1.4116 1.3310 1.4641 1.5181 1.3676 1.4049 1.4429. 1.4815 1.5209 1.7280 1.9531 1.5735 1.6305 1.6890 1.7490 2.0736 2.4414 1.6105 1.6851 10 20 1.5386 1.6771 1.7716 1.8704 2.0762 1.8280 1.9487 1.9926 2.3045 2.4760 2.1436 2.7731 2.1719 2.3579 2.5580 2.3674 2.5937 3.1058 3.3946 2.8394 5.6044 6.7275 1.7623 1.8424 1.9254 2.0114 2.4883 3.0518 1.9738. 2.0820 2.1950 2.2107 2.3526 2.5023 2.3131 2.9860 3.8147 2.6600 3.5832 4.7684 2.6584 2.8526 3.0590 4.2998 5.9605 3.0040 3.2519 3.5179 5.1598 7.4506 3.7072 4.0456 6.1917 9.3132 8.0623 9.6463 11.5231 13.7435 16.3665 38.3376 86.7362 TABLE 11.2A Present Value of $1 Periods 21 31 1 0.9804 0.9709 3.75% 0.9639 0.9615 41 4.251 51 0.9592 0.9524 2 0.9612 0.9426 0.9290 0.9246 0.9201 0.9070 3 0.9423 61 0.9434 0.8900 0.8734 73 81 0.9346 0.9151 0.8954 0.8890 0.8826 0.8638 0.8396 0.9259 0.8573 0.8163 0.7938 4 0.9238 0.8885 0.8631 0.8548 0.8466 0.8227 0.7921 0.7629 0.7350 5 0.9057 0.8626 0.8319 0.8219 0.8121 0.7835 0.7473 0.7130 0.6806 6 0.8880 0.8375 7 0.8706 0.8131 0.8535 0.7894 0.8368 0.7664 10 0.8203 0.7441 20 0.6730 0.5537 0.4789 Periods 91 10 114 1 0.9174 0.9091 0.9009 0.8018 0.7903 0.7790 0.7462 0.7728 0.7599 0.7473 0.7107 0.6651 0.7449 0.7307 0.7168 0.6768 0.6274 0.7180 0.7026 0.6876 0.6446 0.5919 0.6920 0.6756 0.6595 0.6139 0.5584 0.4564 0.4350 0.3769 0.3118 121 13 141 0.8929 0.8850 0.8772 0.7050 0.6663 0.6302 0.6227 0.5835 0.5820 0.5403 0.5439 0.5002 0.5083 0.4632 0.2584 0.2145 151 201 251 0.8696 0.8333 0.8000 2 0.8417 0.8264 0.8116 0.7972 0.7831 0.7695 0.7561 0.6944 0.6400 3 0.7722 0.7513 0.7312 0.7118 0.6931 0.6750 0.6575 0.5787 0.5120 4 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5718 0.4823 0.4096 5 0.6499 0.6209 0.5935 0.5674 0.5428 0.5194 0.4972 0.4019 0.3277 6 0.5963 0.5645 0.5346 0.5066 0.4803 0.4556 0.4323 0.3349 0.2621 7 0.5470 0.5132 0.4817 0.4523 0.4251 0.3996 0.3759 0.2791 0.2097 B 0.5019 0.4665 0.4339 0.4039 0.3762 0.3506 0.3269 0.2326 0.1678 9 0.4604 0.4241 0.3909 0.3606 0.3329 0.3075 0.2843 10 0.4224 0.3855 0.3522 0.3220 0.2946 0.2697 20 0.1784 0.1486 0.1240 0.1037 0.0868 0.0728 0.1938. 0.1342 0.2472 0.1615 0.1074 0.0611 0.0261 0.0115 TABLE 11.3A Future Value of an Annuity of $1 Periods 21 1.0000 31 1.0000 2 2.0200 3 3.0604 2 0300 3.0909 3.75% 1.0000 2.0375 3.1139 3.1216 41 4.25% 5t 61 73 81 1.0000 1.0000 2.0400 2.0425 1.0000 1.0000 1.0000 1.0000 2.0500 2.0600 2 0700 2.0800 3.1293 3.1525 3.1836 3.2149 3.2464 4 4.1216 4.1836 4.2307 4.2465 4.2623 4.3101 4.3746 4.4399 4.5061 5 5.2040 5.3091 5.3893 5.4163 5.4434 5.5256 5.6371 6.3061 6.4684 6.5914 6.6330 6.6748 6.8019 6.9753 7 7.4343 7.6625 7.8386 7.8983 7.9585 8.14201 8.3938 5.7507 5.8666 7.1533 7.3359 8.6540 8.9228 8 8.5830 8.8923 9.1326 9.2142 9.2967 9.5491 9.8975 10.2598 10.6366 9 9.7546 10.1591 10.4750 10.5828 10.6918 11.0266 11.4913 11.9780 12.4876 10 10.9497 11.4639 11.8678 201 24.2974 26.8704 12.0061 29.0174 29.7781 12.1462 12.5779 13.1808 13.8164 14.4866 30.5625 33.0660 36.7856 Periods 91 108 118 12 138 14 151 40.9955 45.7620 201 251 123456789 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 2.0900 2.1000 2.1100 2.1200 2.1300 2.1400 2.1500 2.2000 2.2500 3.2781 3.3100 3.3421 3.3744 3.4069 3.4396 3.4725 3.6400 3.8125 4.5731 4.6410 4.7097 4.7793 4.8498 4.9211 4.9934 5.3680 5.7656 10 20 5.9847 7.5233 9.2004 9.4872 11.0285 11.4359 13.0210 13.5975 15.1929 15.9374 51.1601 57.2750 6.1051 6.2278 6.3528 6.4803 6.6101 6.7424 7.4416 8.2070 7.7156 7.9129 8.1152 8.3227 8.5355 8.7537 9.9299 11.2588 9.7833 10.0890 10.4047 10.7305 11.0668 12.9159 15.0735 11.8594 12.2997 12.7573 13.2328 13.7266 16.4991 19.8419 14.1640 14.7757 16.7220 17.5487 64.2028 72.0524 80.9468 15.4157 16.0853 16.7858 20.7989 25.8023 18.4197 19.3373 20.3037 25.9587 33.2529 91.0249) 102.4436 186.6880 342.9447 TABLE 11.4A Present Value of Annuity of $1 Periods 28 31 3.75% 48 4.251 51 61 1 0.9804 0.9709 0.9639 0.9615 0.9592 0.9524 0.9434 2 1.9416 1.9135 1.8929 1.8861 1.8794 1.8594 1.8334 71 81 0.9346 0.9259 1.8080 1.7833 3 2.8839 2.8286 2.7883 2.7751 2.7620 2.7232 2.6730 2.6243 2.5771 4 3.8077 3.7171 3.6514 3.6299 3.6086 3.5460 3.4651 3.3872 3.3121 4.7135 4.5797 4.4833 4.4518 4.4207 4.3295 4.2124 4.1002 3.9927 5.6014 5.4172 5.2851 5.2421 5.1997 5.0757 4.9173 7 6.4720 6.2303 6.0579 6.0021 5.9470 5.7864 5.5824 4.7665 4.6229 5.3893 5.2064 B 7.3255 7.0197 6.8028 6.7327 6.6638 6.4632 6.2098 5.9713 5.7466 9 8.1622 7.7861 7.5208 7.4353 7.3513 7.1078 6.8017 6.5152 6.2469 10 8.9826 8.5302 8.2128 8.1109 8.0109 7.7217 7.3601 20 16.3514 14.8775 13.8962 13.5903 13.2944 12.4622 Periods* 98 10 % 11% 12% 13% 14% 1234567892 0.9174 0.9091 0.9009 0.8929 0.8550 0.8772 11.4699 15% 0.8696 7.0236 6.7101 10.5940 9.8181 20% 25% 1.7591 1.7355 1.7125 1.6901 1.6681 1.6467 1.6257 0.8333 0.8000 1.5278 1.4400 2.5313 2.4869 3.2397 3.1699 3.8897 3.7908 4.4859 4.3553 2.4437 2.4018 3.1024 3.6959 3.6048 2.3612 2.3216 2.2832 2.1065 1.9520 3.0373 2.9745 2.9137 2.8550 2.5887 2.3616 3.5172 3.4331 3.3522 2.9906 2.6893 4.2305 4.1114 3.9975 3.8887 3.7845 3.3255 2.9514 5.0330 4.8684 4.7122 4.5638 4.4226 4.2883 4.1604 3.6046 3.1611 5.5348 5.3349 5.1461 5.9952 5.7590 5.5370 10 6.4177 6.1446 5.8892 4.9676 5.3282 5.6502 20 9.1285 8.5136 7.9633 7.4694 4.7988 5.1317 4.9464 5.4262 5.2161 7.0248 6.6231 4.6389 4.4873 3.8372 3.3289 4.7716 4.0310 3.4631 60 5.0188 4.1925 3.5705 6.2593 6 4.8696 3.9539