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Answer is complete but not entirely correct. 1. Accounting rate of return 2. Payback period 3. Net present value 4. Net present value assuming 12% cost of capital 4.10 12.18 424,428 (624,004) years

Answer is complete but not entirely correct. 1. Accounting rate of return 2. Payback period 3. Net present value 4. Net present value assuming 12% cost of capital 4.10 12.18 424,428 (624,004) years

Essentials Of Investments
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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ww 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: (Future Value of $1. Present Value of $1. Euture 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. 1. Accounting rate of return 2. Payback penod 3. Net present value 4. Net present value assuming 12% cost of capital 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.. Answer is complete but not entirely correct. 4.10% 12.18 years S $ 470,000 4. Recalculate the NPV assuming BBS's cost of capital is 12 percent. Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar. I 424,428 C (624,094) 9 years $ 47,000 $ 38,540 neil 9% HOLL www
Transcribed Image Text:ww 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: (Future Value of $1. Present Value of $1. Euture 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. 1. Accounting rate of return 2. Payback penod 3. Net present value 4. Net present value assuming 12% cost of capital 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.. Answer is complete but not entirely correct. 4.10% 12.18 years S $ 470,000 4. Recalculate the NPV assuming BBS's cost of capital is 12 percent. Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar. I 424,428 C (624,094) 9 years $ 47,000 $ 38,540 neil 9% HOLL www
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