3 Lexington Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual Increase in cash flow of $110,000. The equipment will have an initial cost of $503,000 and have an six year life. There is no salvage value of the equipment. The hurdle rate is 13%. Ignore income taxes. a. Calculate accounting rate of return. (Do not round intermediate calculations and round your final answer to 2 decimal place.) 02-1853 Rate of Return % b. Calculate payback period (Round your answer to one decimal place.) Payback Period Years