11. Payback and accounting rate of return. Citizen Company is considering the purchase of a P40,000 machine, which will be depreciated on the straight-line basis over an 8-year period with no residual value for both book and tax purposes. The machine is expected to generate an annual pretax cash inflow of P15,000. The income tax rate is 40%. Required: 1. Determine the payback period. 2. Compute the accounting rate of return on the original investment. (aicpa)