CarCare Garage Company is considering an investment in a new tune-up computer. The cost of the computer is $24,000. A cost analyst has calculated the discounted present value of the expected cash flows from the computer to be $26,220, based on the firms cost of capital of 20%.

Required:

a. What is the expected return on investment of the machine, relative to 20%?

The return on investment is ____ 20%.

b. The payback period of the investment in the machine is expected to be 4.6 years. How much weight should this measurement carry in the decision about whether or not to invest in the machine?

The payback period should ____ much weight, because it ____ recognize the time value of money.