Required information The following information applies to the questions displayed below) Falcon Crest Aces (FCA), Inc., is considering the purchase of a small plane to use in its wing walking demonstrations and aerial tour business Various information about the proposed investment follows Initial investment Useful life Salvage value Annual net income generated FCA'S cost of capital $120.000 10 years 10,000 $ 3.000 Assume straight line depreciation method is used 3. Help FCA evaluate this project by calculating each of the following: Net present value (NPV) (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. Do not round Intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.) Net Present Value Falcon Crest Aces (FCA), Inc., is considering the purchase of a small plane to use in its wing walking demonstrations and aerial tour business Various information about the proposed investment follows: Initial investment Useful life Salvage value Annual net income generated FCA'S cost of capital $ 120,000 10 years 10,000 $ 3,000 Assume straight line depreciation method is used. 5. Without doing any calculations, what is the project's IRR? Multiple Choice Between 3% and 8% O O Less than 3% O Greater than 8% Merrill Corp. has the following information available about a potential capital investment: Initial investment Annual net income Expected life Salvage value Merrill's cost of capital $1,800,000 $ 200,000 8 years $ 240,000 10% Assume straight line depreciation method is used. Required: 1. Calculate the project's net present value. 2. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 10 percent. 3. Calculate the net present value using a 15 percent discount rate. 4. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 15 percent. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req 3 and 4 3. Calculate the net present value using a 15 percent discount rate. (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. Do not round intermediate calculations. Round the final answer to nearest whole dollar.) 4. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 15 percent. Show less 3. Net Present Value Internal Rate of Return (IRR)
