Payback and ARR (LO4). Rego and Associates plans to invest $1,200,000 in modernizing their call centers. They expect productivity to increase and generate 8,000 more billable hours annually. The...

Payback and ARR (LO4). Rego and Associates plans to invest $1,200,000 in modernizing their call centers. They expect productivity to increase and generate 8,000 more billable hours annually. The current billing rate is $50 per hour. The effect of the investment on productivity will last for five years. The company uses a discount factor of 10% on its capital projects (ignore taxes).

Required:

a. What is the payback period on this project?

b. What is the modified payback period on this project?

c. What is the project’s accounting rate of return?