09. (Ignore income taxes in this problem.) Ursus, Inc., is considering a project that would have a ten- year life and would require a $1,000,000 investment in equipment. At the end of ten years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows: Sales Variable expenses Contribution margin Fixed expenses.. Net operating income. $2,000,000 1.400.000 600,000 400.000 $ 200.000 All of these items, except for depreciation of $100,000 a year, represent cash flows. The depreciation is included in the fixed expenses. Required - 1. Compute the project's payback period 2. Another method that can be used to analyze project or investment is the average rate of return method. Explains two strengths of this method compared to payback method