7. SLM Corporation is considering the purchase of a new piece of equipment for laying sod. Relevant information concerning the equipment follows: Cost of the equipment $180,000 Annual cost savings from new equipment $37,500 Life of the new equipment 12 years Required: a) Compute the payback period for the equipment. If the company requires a payback period of four years or less, would the equipment be purchased? b) Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment's useful life. Would the equipment be purchased if the company's required rate of return is 14%