Hot Air Highlights (HAH) is considering the purchase of two new hot air balloons

Question

Hot Air Highlights (HAH) 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: (Use Table 2 & Table 4.)

Accounting rate of return. (Round your answer to 2 decimal places. Omit the "%" sign in your response.)

Net present value (NPV). (Negative amount should be indicated by a minus sign. Round your intermediate calculations to 4 decimal places and final answer to the nearest whole dollar amount. Omit the "$" sign in your response.)

Recalculate the NPV assuming HAH's cost of capital is 20 percent. (Negative amount should be indicated by a minus sign. Round your intermediate calculations to 4 decimal places and final answer to the nearest whole dollar amount. Omit the "$" sign in your response.)

Initial investment (for two hot air balloons) $ 361,000 Useful life 8 years Salvage value $ 49,000 Annual net income generated $ 33,212 HAH's cost of capital 14 %

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