A machine can be purchased for $252,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied using a five-year life and a zero salvage value. Year 1 Net Income $15,000 Year 2 $42,000 Year 3 $56,000 Year 4 $40,000 Year 5 $135,000 Compute the machine's payback period ignore taxes). (Round payback period answer to 3 decimal places.) Computation of Annual Depreciation Expense Beginning Annual Depr. Accumulated Ending Year Book (40% of Book Depreciation at Book Value Value) Year-End Value Annual Cash Flows Depreciation Net Cash Flow Not income Year Cumulative Cash Flow (252,000) (252.000) 15.000 42.000 56.0001 40.000 135.000 56.000 40.000 135,000 56.000 96.000 231,000 Payback period year Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company to add a new product to its computer furniture line. The equipment is expected to cost $294,000 and to have a seven-year te and no salvage value. It will be deprecated on a straight line basis. Business Solutions expects to sell 100 units of the equipment's product each year. The expected annual Income related to this equipment to ows. $379,000 Costs Materials, labor, and overhead (except depreciation) Depreciation on new equipment Selling and administrative expenses Total costs and expenses Pretax Income Income taxes (408) Net Income 198,000 42,000 39,000 279,000 100,000 40,000 $ 60,000 Required: (1) Compute the payback period. Choose Numerator: Choose Numerator: 1 Payback Period Choose Denominator: = Payback Period = Payback period (2) Compute the accounting rate of return for this equipment. Accounting Rate of Return Choose Denominator Choose Numerator: Accounting Rate of Return Accounting rate of return