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PA11-1 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)
PA11-1 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 Initial investment (for two hot air balloons) Useful life Salvage value Annual net income generated BBS's cost of capital 328,000 7 years $ 48,000 30,504 996 Assume straight line depreciation method is used. Required Help BBS evaluate this project by calculating each of the following: 1.Accounting rate of retum. (Round your answer to 1 decimal place.) unting Rate of Return 2. Payback period. (Round your answer to 2 decimal places.) back Period
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