EXERCISE 13-12 Basic Payback Period and Simple Rate of pece of equipment. Relevant information Martin Company is considering the purchase of a new piece of equipment. Relevant information concerning the equipment follows: Required: (Ignore income taxes.) 1. Compute the payback period for the equipment. If the company rejects all proposals with a payback period of more than four years, would the equipment be purchased? 2. Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment's useful life. Would the equipment be purchased if the company's required rate of return is 14%