Business, 21.03.2020 02:01 foreignev

Linda’s Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the proposed investment follows: Initial investment (2 limos) $ 1,080,000 Useful life 10 years Salvage value $ 120,000 Annual net income generated $ 95,040 LLT’s cost of capital 15 % 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%.

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

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