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E11-4 (Algo) Calculating Accounting Rate of Return, Payback Period, Net Present Value, Estimating Internal Rate of Return [LO 11-1, 11-2, 11-3, 11-4]

Lindas Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows:

Initial investment (2 limos)	$	1,320,000
Useful life		10	years
Salvage value	$	130,000
Annual net income generated	$	121,440
LLTs cost of capital		15	%

Assume straight line depreciation method is used.

Required:

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

3. Net present value.

Table or Calculator Function: Cash Outflow (Beginning of the Year) n = i = 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 = Table Factor Present Value Total Net Present Value