Henry Hardware is adding a new product line that will require an investment of $1,512,000. Managers estimate that this investment will have a 10-year life and generate net cash inflows of $310,000 the first year, $270,000 the second year, and $240,000 each year thereafter for eight years.

Part 1

Compute the payback period. Round to one decimal point.

Part 2

Assume the project has no residual value. Calculate the Accounting Rate of Return for the investment.