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Please answer all parts of the question. Thanks! Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed
Please answer all parts of the question. Thanks!
Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investmen follows: Initial investment (2 limos) Useful life Salvage value Annual net income generated LLT's cost of capital $1,680,000 10 years $ 140,000 $ 164,640 15% Assume straight line depreciation method is used. Required: Help ULT evaluate this project by calculating each of the following: 1. Accounting rate of return 2. Payback period. 3. Net present value 4. Without making any calculations, determine whether the IRR is more or less than 15% Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Calculate accounting rate of return. (Round your answer to 1 decimal place.) Accounting Rate of Retum % Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Calculate payback period. (Round your answer to 2 decimal places.) Payback Period years Required 1 Required 2 Required 3 Required 4 Calculate net present value. (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. Cash Outflows and negative amounts should be indicated by a minus sign. Round your "Present Values" to the nearest whole dollar amount.) Show less Table or Calculator Function Cash Outflow (Beginning of the Year) n % Present Value Table or Calculator Function Cash Inflow (for Next 10 years) n % Table Factor Present Value Table or Calculator Function Cash Inflow (for 10th Year) n 1 % Table Factor Present Value Total Net Present Value 1. Accounting rate of return 2. Payback period 3. Net present value 4. Without making any calculations, determine whether the IRR is more or less than 15% Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Without making any calculations, determine whether the IRR is more or less than 15% IRR Step by Step Solution
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