Exercise 24-8 Payback period and accounting rate of return on investment LO P1, P2 B2B Co. 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 $336,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 134,400 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 210,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on new equipment Selling and administrative expenses Total costs and expenses Pretax income Income taxes (20%) Net income 112,000 28,000 21,000 161,000 49,000 9,800 39,200 $ 1. Compute the payback period. 2. Compute the accounting rate of return for this equipment. Required 1 Required 2 Compute the payback period. Payback Period Choose Numerator: 1 Choose Denominator: = Payback Period Payback period Required 1 Required 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