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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. 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 885'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 period 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. 3. Net present value 4 Net present value assuming 11% cost of capital $ 540,000 4. Recalculate the NPV assuming BBS's cost of capital is 11 percent Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar. S 9 years $ 45,000 $ 44,250 102.702 8.20 % 5.44 years

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 885'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 period 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. 3. Net present value 4 Net present value assuming 11% cost of capital $ 540,000 4. Recalculate the NPV assuming BBS's cost of capital is 11 percent Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar. S 9 years $ 45,000 $ 44,250 102.702 8.20 % 5.44 years

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 9PA: Pitt Company is considering two alternative investments. The company requires a 12% return from its...
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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) 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. 2. Payback period. Note: Round your answer to 2 decimal places. 1 Accounting rate of return 2 Payback period 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. 3. Net present value 4 Net present value assuming 11% cost of capital - $540,000 $ 45,000. $ 44,200 4. Recalculate the NPV assuming BBS's cost of capital is 11 percent. Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar. $ 9 years 8.20 % 5:44 years 102.702 8%
Transcribed Image Text: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) 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. 2. Payback period. Note: Round your answer to 2 decimal places. 1 Accounting rate of return 2 Payback period 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. 3. Net present value 4 Net present value assuming 11% cost of capital - $540,000 $ 45,000. $ 44,200 4. Recalculate the NPV assuming BBS's cost of capital is 11 percent. Note: Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar. $ 9 years 8.20 % 5:44 years 102.702 8%
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