For each machine compute the projected accounting rate of return. Compute the payback period for each machine. The company's minimum rate of return is 12%. The maximum payback period is 6 years.

Machine 1 Machine 2

Cost of machine $500,000 $550,000
Residual value $50,000 $50,000
Net income 34,695 40,670
Annual net cash inflows 91215 90170