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 $343,000 and to have a seven-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	$	379,000
Costs
Materials, labor, and overhead (except depreciation)		198,000
Depreciation on new equipment		49,000
Selling and administrative expenses		36,500
Total costs and expenses		283,500
Pretax income		95,500
Income taxes (30%)		28,650
Net income	$	66,850

Required: (1) Compute the payback period.

(2) Compute the accounting rate of return for this equipment.