Morgan Company is considering a capital investment of $183,000 in additional productive facilities. The new machinery is expected to have a useful life of five years with no salvage value. Depreciation is by the straight-line method. During the life of the investment, annual net income and net annual cash flows are expected to be $20,130 and $61,000, respectively. Morgan has a 12% cost of capital rate, which is also the minimum acceptable rate of return on the investment.

(a)

Calculate (1) the cash payback period and (2) the annual rate of return on the proposed capital expenditure. (Round cash payback period to 1 decimal place, e.g. 15.1 and annual rate of return to 2 decimal places, e.g. 15.12%.)

(1)	Cash payback period			years
(2)	Annual rate of return			%