by using on pe careinformation about the proposed investment follows: (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present ValueAnnuity of $1.)Note: Use appropriate factor(s) from the tables provided.Initial investment (for two hot air balloons)Useful lifeSalvage valueAnnual net income generatedBBS's cost of capitalAssume straight line depreciation method is used.Required:Help BBS evaluate this project by calculating each of the following:1. Accounting rate of returnNote: Round your answer to 2 decimal places.$ 505,0001.Accounting rate of return2. Payback period3. Net present valueNet present value assuming 14% cost of capital10 years$ 45,000$ 37,8752. Payback period.Note: Round your answer to 2 decimal places.3. Net present value (NPV)Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer tonearest whole dollar.11N4. Recalculate the NPV assuming BBS's cost of capital is 14 percent.Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer tonearest whole dollar.%yearsChe

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Business

Accounting

1. Accounting rate of return Note: Round your answer to 2 decimal places.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

by using on pe care
information about the proposed investment follows: (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.
Initial investment (for two hot air balloons)
Useful life
Salvage value
Annual net income generated
BBS's cost of capital
Assume straight line depreciation method is used.
Required:
Help BBS evaluate this project by calculating each of the following:
1. Accounting rate of return
Note: Round your answer to 2 decimal places.
$ 505,000
1.Accounting rate of return
2. Payback period
3. Net present value
Net present value assuming 14% cost of capital
10 years
$ 45,000
$ 37,875
2. Payback period.
Note: Round your answer to 2 decimal places.
3. 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.
11N
4. Recalculate the NPV assuming BBS's cost of capital is 14 percent.
Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to
nearest whole dollar.
%
years
Che

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