Midwest Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $89,000 with a $8,000 residual value and a five-year life. The equipment will replace one employee who has an average wage of $34,490 per year. In addition, the equipment will have operating and energy costs of $8,590 per year.

Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment. If required, round to the nearest whole percent. %

Prime Financial Inc. is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $180,000 and each with an eight-year life and expected total net cash flows of $360,000. Location 1 is expected to provide equal annual net cash flows of $45,000, and Location 2 is expected to have the following unequal annual net cash flows:

Year 1	$81,000		Year 5	$43,000
Year 2	61,000		Year 6	32,000
Year 3	38,000		Year 7	25,000
Year 4	58,000		Year 8	22,000

Determine the cash payback period for both location proposals.

Location 1	years
Location 2	years