Q1. Somsom Bhd, a manufacturing firm, is considering investing $110,000 in a new mainframe computer. It is estimated that net cash flow per year will be $25,000 and the computer will have a 10-year useful life and zero residual value. The machine will be depreciated on a straight-line basis. The accounting rate of return is:

Select one:

a.25.45%.

b.28.28%

c.23.10%.

d.22.72%.

Q2. Philip is considering purchasing a new button holer for his business. He estimates the machine will cost $90,000 and will be paid for in cash. The net cash from the first 4 years of operation of the machine will be $20,000 in year 1, $30,000 in year 2, $35,000 in year 3 and $35,000 in year 4. The payback period for the machine is:

Select one:

a.3.14 years

b.3.86 years

c.2.66 years

d.4 years

please explain clearly