Jason’s WebDesigns is owned and operated by Jason Armstrong, who has been working out of his home for the last five years. Jason has decided that it is time to establish a more professional...

Jason’s WebDesigns is owned and operated by Jason Armstrong, who has been working out of his home for the last five years. Jason has decided that it is time to establish a more professional appearance. A small building in a central business district has become available. Though it is too small for most businesses, it will offer Jason just the right amount of space to get started. The building, which has a useful life of 25 years, will cost $250,000. Jason will hire an assistant to handle his phone calls, e-mail, invoicing, and other office tasks. The salary plus benefits that he intends to offer will total $40,000 per year. Other office operating costs should run $25,000 per year. With the extra time and visibility he gains from these changes, Jason expects to increase his revenue by $125,000 per year.

Required

a. Calculate the payback period for Jason’s move to the new building.

b. Calculate the accounting rate of return for this move.