Lexington Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $ The equipment will have an initial cost of $ and have an six year life. There is no salvage value of the equipment. The hurdle rate is Ignore income taxes.

a Calculate accounting rate of return. Do not round intermediate calculations and round your final answer to decimal place.

b Calculate payback period Round your answer to one decimal place.