Business, 17.06.2020 04:57 jgrable5175

Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows: Initial investment (2 limos) $720,000
Useful life 10 years
Salvage value $100,000
Annual net income generated 59,040
LLT's cost of capita 14%
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%.
A. Greater than 14%.
B. Less than 14%.

Answers: 3

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Linda's Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various informatio...

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