Dracor Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $280,000 with a 7-year life, no salvage value, and will be depreciated using straight-line depreciation. The expected annual income related to this equipment follows. Sales Costs: $900,000 Manufacturing costs $545,000 Depreciation on machine ent centers of the DeS s considering the effect of Selling and administrative expenses 40,000 249,000 Income before taxes Income tax (30%) de Net income hree year and but the (834,000) 66,000 ment. Net (19,800) $ 46,200 that total assets each vestment for each of the next three Show all cal ations. Round percentages Required: a) Calculate the payback period. the change in decimal places. of the unit and manager in part a) in terms of b) Calculate the accounting rate of return for this equipment. c) Briefly explain the meaning of present value, and why the fact that these methods don't consider present value makes the results less useful. purchases of