Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the...
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Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows: Initial investment (2 1imos) Uneful 1ite 01,500,000 Salvage value Annual net income generated LLT' Cost of capital 10 years 140,000 6 142,500 144 Assume straight line depreciation method is used, Required: Help LLT 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 14%. Complete this question by entering your answers in the tabs below. Check my work Calculate net present value. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of s1.) (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 a Table or Calculator Function: Present Value of $1 Cash Outfow (Beginning of the Year) 1,500,000 14 % 1,500,000 Present Value Table or Calculator Function: Present Value Annuity of $1 Cash Inflow (for Next 10 Years) 10 14 % Table Factor Present Value Table or Caloulator Function: Present Value of $1 Cash Inflow (for 10th Year) Check my work Present Value 1,500,000 Table or Calculator Function: Cash Inflow (for Next 10 Years) Present Value Annuity of $1 10 14 % Table Factor Present Value Table or Calculator Function: Present Value of $1 Cash Inflow (for 10th Year) 10 14 % Table Factor Present Value Total Net Present Value < Required 2 Required 4> Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows: Initial investment (2 1imos) Uneful 1ite 01,500,000 Salvage value Annual net income generated LLT' Cost of capital 10 years 140,000 6 142,500 144 Assume straight line depreciation method is used, Required: Help LLT 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 14%. Complete this question by entering your answers in the tabs below. Check my work Calculate net present value. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of s1.) (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 a Table or Calculator Function: Present Value of $1 Cash Outfow (Beginning of the Year) 1,500,000 14 % 1,500,000 Present Value Table or Calculator Function: Present Value Annuity of $1 Cash Inflow (for Next 10 Years) 10 14 % Table Factor Present Value Table or Caloulator Function: Present Value of $1 Cash Inflow (for 10th Year) Check my work Present Value 1,500,000 Table or Calculator Function: Cash Inflow (for Next 10 Years) Present Value Annuity of $1 10 14 % Table Factor Present Value Table or Calculator Function: Present Value of $1 Cash Inflow (for 10th Year) 10 14 % Table Factor Present Value Total Net Present Value < Required 2 Required 4>
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Related Book For
Managerial Accounting
ISBN: 978-0078025518
2nd edition
Authors: Stacey Whitecotton, Robert Libby, Fred Phillips
Posted Date:
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