[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	$	260,000
Useful life	$	10	years
Salvage value		25,000
Annual net income generated	$	5,800
FCA's cost of capital		7	%

Assume straight line depreciation method is used.

rev: 04_20_2017_QC_CS-86552

3.

value: 2.50 points

Required information

Required: Help FCA evaluate this project by calculating each of the following: 1. Accounting rate of return. (Round your answer to 2 decimal places.)

4.

value: 2.50 points

Required information

2. Payback period. (Round your answer to 2 decimal places.)

5.

value: 3.00 points

Required information

3. 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. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.)

rev: 04_20_2017_QC_CS-86552

6.

value: 2.00 points

Required information

5.	Without doing any calculations, what is the project's IRR?

Between 3% and 7%

Less than 3%

Greater than 7%