1. Golden gates Ltd, a manufacturing firm, is considering investing $330,000 in a new system. It is estimated that net cash flow per year will be $60,000 and the computer will have a 10-year useful life and $30,000 residual value. The machine will be depreciated on a straight-line basis. You are approached to provide advice to the management. One of the questions the management would like to know is as follows: What is the accounting rate of return in percentage?

2 .Epworth Pty Ltd, a beauty center, intends to purchase an additional piece of equipment in response to the possible increase in the number of their clients. The managers are contemplating the financial aspect of such a decision. The equipment would cost $2,200,000. The annual cash inflows from the new truck are expected to be $440,000 per year. The equipment has a ten-year useful life. You are required to advise on the number of years that it will take to recover the cost of the investment (payback period)?