Balloons By Sunset BBS is considering the purchase of two new hot air balloons so that it can expand its desert sunset tours. Various
information about the proposed investment follows: Future Value of $ Present Value of $ Future Value Annuity of $ Present Value
Annuity of $
Note: Use appropriate factors from the tables provided.
Initial investment for two hot air balloons
Salvage value $
Annual net income generated $
BBSs cost of capital
Assume straight line depreciation method is used.
Required:
Help BBS evaluate this project by calculating each of the following:
Accounting rate of return.
Note: Round your answer to decimal places.
Payback period.
Note: Round your answer to decimal places.
Net present value NPV
Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to
nearest whole dollar.
Recalculate the NPV assuming BBSs cost of capital is percent.
Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to
nearest whole dollar.
