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 limos) Useful life Salvage value Annual net income generated LLT's cost of capital $ 1,080,000 10 years $ 120,000 $ 95,040 Assume straight line depreciation method is used. Required: 15 Help LLT evaluate this project by calculating each of the following: 1. Accounting rate of return. 2. Payback period. 3. Net present value. (Future Value of $1,Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. 4. Without making any calculations, determine whether the IRR is more or less than 15%. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Calculate accounting rate of return. Note: Round your answer to 1 decimal place. Accounting Rate of Return % Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows: Initial investment (2 limos) Useful life Salvage value Annual net income generated LLT's cost of capital $ 1,080,000 10 years $ 120,000 $ 95,040 Assume straight line depreciation method is used. Required: 15 Help LLT evaluate this project by calculating each of the following: 1. Accounting rate of return. 2. Payback period. 3. Net present value. (Future Value of $1,Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. 4. Without making any calculations, determine whether the IRR is more or less than 15%. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Calculate accounting rate of return. Note: Round your answer to 1 decimal place. Accounting Rate of Return %

Answer rating: 100% (QA)

1 Accounting Rate of Return can be computed as Annual Net Income Initial Investment 100 Substituting ... View the full answer