Linda’s Luxury Travel (LLT) is considering the purchase of two Hummer limousines. Various information about the…

Linda’s Luxury Travel (LLT) is considering the purchase of two
Hummer limousines. Various information about the proposed
investment follows:

Intital Investment
780,000

Useful Life
10 Years

Salvage Value
100,000

Annual Net Income Generated
64,740

LLT’S Cost of capital
15%

Assume straight line depreciation method is
used.     
Required:
Help LLT evaluate this project by calculating each of the
following:
1. Accounting rate of return.
2. Payback period.
3. Net present value.
4. Without making any calculations, determine
whether the IRR is more or less than 15%.