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Dobson Corp. is considering the purchase of a new piece of equipment. The cost savings...

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Accounting

Dobson Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income of $58,000. The equipment will have an initial cost of $504,000 and have an seven year life. There is no salvage value of the equipment. The hurdle rate is 13%. Ignore income taxes. a. Calculate accounting rate of return. (Round your answer to 2 decimal places.) b. Calculate payback period. (Round your answer to one decimal place.)

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