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 $220,000 and to have a five-year life and no salvage value. It will be depreciated on a straight-line basis. Business Solutions expects to sell 100 units of the equipment's product each year. The expected annual income related to this equipment follows. $ 377,000 Sales Costs Materials, labor, and overhead (except depreciation) Depreciation on new equipment Selling and administrative expenses 191.000 44.000 38.000 Total costs and expenses 273,000 Pretax income Income taxes (35%) 104,000 36,400 Net income $ 67,600 Required: (1) Compute the payback period. Payback Period Choose Numerator: 7 Choose Denominator: = Cost of investment Annual net cash flow = 220,000/ Payback Period Payback period S (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