Seth Fitch owns a small retail ice cream parlor. He is considering expanding the

business and has identified two attractive alternatives. One involves purchasing

a machine that would enable Mr$.$ Fitch to offer frozen yogurt to customers. The

machine would cost $$7,890$ and has an expected useful life of three years with

no salvage value. Additional annual cash revenues and cash operating expenses

associated with selling yogurt are expected to be $$6,130$ and $$900,$ respectively.

Alternatively, Mr$.$ Fitch could purchase for $$10,000$ the equipment necessary to

serve cappuccino. That equipment has an expected useful life of four years and

no salvage value. Additional annual cash revenues and cash operating expenses

associated with selling cappuccino are expected to be $$8,480$ and $$2,390,$

respectively.

Income before taxes earned by the ice cream parlor is taxed at an effective rate

of $20$ percent.

Required

a$.$ Determine the payback period and unadjusted rate of return $($use average

investment$)$ for each alternative.

Note: Round your answers to $2$ decimal places.