39 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 $100,000. The equipment will have an initial cost of $512,000 and have an seven year life. There is no salvage value of the equipment. The hurdle rate is 8%. Ignore income taxes. a. Calculate accounting rate of return. (Do not round intermediate calculations and round your final answer to 2 decimal place.) Rate of Return % b. Calculate payback period (Round your answer to one decimal place.) Payback Period Years