E11-4 (Algo) Calculating Accounting Rate of Return, Payback Period, Net Present Value, Estimating Internal Rate...
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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) 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 $ 780,000 10 years $ 100,000 $ 64,740 159 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 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. (Round your answer to 1 decimal place.) Accounting Rate of Retur 8.31% Required 2 >
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