Q.5 (a) A machine will cost 80 000. It has an expected life of 4 years with an anticipated scrap value of 10 000. Expected net operating cash inflows each year are as follows:

1. 20 000

2 30 000

3. 40 000

4. 10 000

Calculate the ARR of the project.[ 10 marks]

(b)A machine will cost 80 000. It has an expected life of four years with an anticipated scrap value of 80 000.

Expected net operating cash inflows each year are as follows:

1 20 000

2 30 000

3 40 000

4 10 000

Calculate the payback period of the project. [ 10 marks ]