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Falcon Crest Aces (FCA), Inc., is considering the purchase of a small plane to use in its wingwalking demonstrations and aerial tour business. Various information about the proposed investment follows:

Initial investment	$	170,000
Useful life		10	years
Salvage value	$	20,000
Annual net income generated	$	4,000
FCA's cost of capital		8	%

Assume straight line depreciation method is used.

8.

value: 10.00 points

Required:

Help FCA evaluate this project by calculating each of the following:

1.	Accounting rate of return. (Round your answer to 2 decimal places.)

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9.

value: 10.00 points

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

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10.

value: 10.00 points

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.)

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11.

value: 10.00 points

4.	Recalculate FCA's NPV assuming the cost of capital is 3% percent. (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. Round your final answer to the nearest whole dollar amount.)

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12.

value: 10.00 points

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

	Between 3% and 8%
	Less than 3%
	Greater than 8%

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