3.75 oints Book Print References Bloons 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: (Euture Value of $1. Present Value of $1. Euture Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided.) Initial investment (for two hot air balloons) Useful life Salvage value Annual net income generated 385's cost of capital $259,000 $ 43,000 23,238 95 Assume straight line depreciation method is used. Required: Help BBS evaluate this project by calculating each of the following years 1. Accounting rate of return. (Round your answer to 2 decimal places.) 2. Payback period. (Round your answer to 2 decimal places.) 3. Net present value (NPV) (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar) 1. Accounting rate of return 2. Payback period 3 Net present value 4. Net present value assuming 12% cost of capital 4. Recalculate the NPV assuming BBS's cost of capital is 12 percent. (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar) years
3.75 oints Book Print References Bloons 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: (Euture Value of $1. Present Value of $1. Euture Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided.) Initial investment (for two hot air balloons) Useful life Salvage value Annual net income generated 385's cost of capital $259,000 $ 43,000 23,238 95 Assume straight line depreciation method is used. Required: Help BBS evaluate this project by calculating each of the following years 1. Accounting rate of return. (Round your answer to 2 decimal places.) 2. Payback period. (Round your answer to 2 decimal places.) 3. Net present value (NPV) (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar) 1. Accounting rate of return 2. Payback period 3 Net present value 4. Net present value assuming 12% cost of capital 4. Recalculate the NPV assuming BBS's cost of capital is 12 percent. (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar) years
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Subject: accounting
Transcribed Image Text:23.75
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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: (Euture Value of $1. Present Value of $1. Euture Value Annuity of $1. Present Value
Annuity of $1.) (Use appropriate factor(s) from the tables provided.)
Initial investment (for two hot air balloons)
Useful life
Salvage value
Annual net income generated
BB5's cost of capital
$259,000
43,000
23,238
Assume straight line depreciation method is used.
Required:
Help BBS evaluate this project by calculating each of the following
1. Accounting rate of retur
2. Payback period
3 Net present value
4. Net present value assuming 12% cost of capital
years
95
1. Accounting rate of return. (Round your answer to 2 decimal places.)
2. Payback period. (Round your answer to 2 decimal places.)
3. Net present value (NPV) (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round
the final answer to nearest whole dollar)
4. Recalculate the NPV assuming BBS's cost of capital is 12 percent. (Do not round intermediate calculations. Negative amount
should be indicated by a minus sign. Round the final answer to nearest whole dollar)
years
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