(Ignore income taxes in this problem.) Alesi Corporation is considering purchasing a machine that would cost $464,610 and have a useful life of 7 years. The machine would reduce cash operating costs by $91,100 per year. The machine would have a salvage value of $107,200 at the end of the project. (Assume the company uses straight-line depreciation.)

Required:

a. Compute the payback period for the machine. (Round your answer to 2 decimal places.)

Payback period.......years

b. Compute the simple rate of return for the machine. (Round your intermediate answers to nearest whole dollar and your final answer to 2 decimal places.)

Simple rate of return ..... %