Bayern-Bauwerk is thinking of buying, at a cost of €220 000, some new packaging equipment that is expected to save €50 000 in cash-operating costs per year. Its estimated useful life is 10 years, and it will have zero terminal disposal value. The required rate of return is 16%.

Required

1 Calculate the payback period.

2 Calculate the net present value.

3 Calculate the internal rate of return.

4 Calculate the accounting rate of return based on net initial investment. Assume straight line depreciation.