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 $329,000 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	$	384,000
Costs
Materials, labor, and overhead (except depreciation)		192,000
Depreciation on new equipment		47,000
Selling and administrative expenses		33,500
Total costs and expenses		272,500
Pretax income		111,500
Income taxes (40%)		44,600
Net income	$	66,900

Required: (1) Compute the payback period.

Payback Period
Choose Numerator:	/	Choose Denominator:	=	Payback Period
	/		=	Payback period
			=	0

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

Accounting Rate of Return
Choose Numerator:	/	Choose Denominator:	=	Accounting Rate of Return
	/		=	Accounting rate of return
				0