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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: (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) $ 410,000   Useful life 9 years Salvage value $ 50,000   Annual net income generated $ 32,800   BBS’s cost of capital 10 % Assume straight line depreciation method is used. Required: Help BBS evaluate this project by calculating each of the following: Accounting rate of return. Note: Round your answer to 2 decimal places. Payback period. Note: Round your answer to 2 decimal places. 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. Recalculate the NPV assuming BBS's cost of capital is 13 percent. Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar. 1. is 8.00% 2. is 5.63 years 3.I couldnt get the last 2

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, 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) $ 410,000   Useful life 9 years Salvage value $ 50,000   Annual net income generated $ 32,800   BBS’s cost of capital 10 % Assume straight line depreciation method is used. Required: Help BBS evaluate this project by calculating each of the following: Accounting rate of return. Note: Round your answer to 2 decimal places. Payback period. Note: Round your answer to 2 decimal places. 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. Recalculate the NPV assuming BBS's cost of capital is 13 percent. Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar. 1. is 8.00% 2. is 5.63 years 3.I couldnt get the last 2

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
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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: (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) $ 410,000  
Useful life 9 years
Salvage value $ 50,000  
Annual net income generated $ 32,800  
BBS’s cost of capital 10 %

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.

  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.

  4. Recalculate the NPV assuming BBS's cost of capital is 13 percent.

    Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.

    1. is 8.00% 2. is 5.63 years 3.I couldnt get the last 2 
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