Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company to add a new product to its computer furniture line. The equipment is expected to cost $312,000 and to have a six-year life and no salvage value. It will be depreciated on a straight-line basis. Business Solutions expects to sell 100 units of the equipments product each year. The expected annual income related to this equipment follows.

Sales	$	377,000
Costs
Materials, labor, and overhead (except depreciation)		198,000
Depreciation on new equipment		52,000
Selling and administrative expenses		38,500
Total costs and expenses		288,500
Pretax income		88,500
Income taxes (35%)		30,975
Net income	$	57,525

(1) Compute the payback period. Payback Period Choose Numerator: 1 Choose Denominator: = = Payback Period Payback period (2) Compute the accounting rate of return for this equipment. Accounting Rate of Return Choose Denominator: Choose Numerator: = = Accounting Rate of Return Accounting rate of return |