Exercise 16-15 Computing the payback period and unadjusted rate of return for the same investment opportunity LO 16-4 Norman Rentals can purchase a van that costs $87,000; it has an expected useful life of three years and no salvage value. Norman uses straight-line depreciation. Expected revenue is $43,877 per year. Assume that depreciation is the only expense associated with this investment. Required a. Determine the payback period. (Round your answer to 1 decimal place.)

payback period

years

b. Determine the unadjusted rate of return based on the average cost of the investment. (Round your answer to 1 decimal place. (i.e., .234 should be entered as 23.4).)

unadjusted rate of return

%