Magna Inc. is considering modernizing its production facility by investing in new equipment and selling the old equipment. The following information has been collected on this investment.

Old Equipment				New Equipment
Cost		$80,400		Cost		$38,480
Accumulated depreciation		$41,700		Estimated useful life		8 years
Remaining life		8 years		Salvage value in 8 years		$5,000
Current salvage value		$10,600		Annual cash operating costs		$29,700
Salvage value in 8 years		$0
Annual cash operating costs		$36,000

Depreciation is $10,050 per year for the old equipment. The straight-line depreciation method would be used for the new equipment over an eight-year period with salvage value $5,000.

QUESTION 1: Determine the cash payback period (Ignore income taxes). (Round answer to 3 decimal places, e.g. 15.275.)

Cash payback period____years

QUESTION 2: Calculate the annual rate of return. (Round answer to 2 decimal places, e.g. 15.25%.)