Gibson Rentals can purchase a van that costs $140,000; it has an expected useful life of five years and no salvage value. Gibson uses straight-line depreciation. Expected revenue is $51,870 per year. Assume that depreciation is the only expense associated with this investment.

Required

1. Determine the payback period. (Round your answer to 1 decimal place.)

2. 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).)

a. Payback period b. Unadjusted rate of return years