Exercise 25-8 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 $216,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 86,400 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 135,000 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 (40%) Net income 72,000 18,000 13,500 103,500 31,500 12,600 18,900 $ 1. Compute the payback period. 2. Compute the accounting rate of return for this equipment. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the payback period. Choose Numerator: Payback Period Choose Denominator: Annual net cash flow Payback Period Payback period Cost of investment Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the accounting rate of return for this equipment. Accounting Rate of Return Choose Denominator Choose Numerator: Annual after-tax net income Accounting Rate of Return Accounting rate of return 1 Annual average investment = O