Answer and Explanation:
The computation is shown below
Payback period is
= Purchase value ÷ expected revenue per year
= $108,000 ÷ $45,360
= 2.38 years
= 2.4 years
Now the unadjusted rate of return based on the average cost of the investment is
= ($45,360 - $108,000 ÷ 4) ÷ ($108,000 ÷ 2)
= $18,360 ÷ $54,000
= 34.0%
The same would be considered