Problem:
Brewer Company is considering purchasing a machine that would cost $464,610 and have a useful life of 7 years. The machine would reduce cash operating costs by $91,100 per year. The machine would have a salvage value of $107,200 at the end of the project. (Ignore income taxes.)
Required:
a. Compute the payback period for the machine. (Round your answer to 2 decimal places.)
Payback period years?
b. Compute the simple rate of return for the machine. (Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Simple rate of return % ?