Q1 ABC Company is studying a project that would have a 4 year life and require a $1,600,000 investmentin equipment. At the end of eight years, the project would terminate and the equipment would have no value left over The project would provide net income each year as follows: Sales Less COGS Gross Margin 3,200,000 300,000 2,900,000 Less: Operating Expenses Advertising, Salaries and other fixed Salary Expense Amortization Total Expenses 1,050,000 1,300,000 100,000 2.450,000 Net Income 450,000 The company's discount rate is 18% 1) compute the net annual cash inflow from project 2) compute the net present value of the project. Is it acceptable? Q2 Baron Ltd makes a commercial cleaning compound known as Loom. The direct materials and direct labour standards for one unit of Loomp follow Standard Quantity Standard Price or or houts Standard Cost Rate Direct materials 2.1 kg $5.50 per $1155 Direct Labour 0.2 hour 112.00 per hour 2.40 During the most recent month, the following activity was recorded a: 9,000 kg of materials were purchased at a cost of $5.20 per kg b. All of the material purchased was used to produce 4,000 units of Loom c. A total of 750 hours of direct labour time was recorded at a total labour cost of $10,425 Required: 1. Compute the direct materials price and quantity variances for the month 2. Compute the direct labour rate and efficiency variances for the month