Exercise 2-11 Payback method

- Replacement decision For the investment in exercise 2-7 resp. exercise 2-9 we now compare the project by means of the payback method in addition to the already calculated profit comparison and comparison of accounting rates of return. Use a payback acceptance period of 5 years.

a) First evaluate the decision criterion in general.

b) Calculate the non-discounting payback based on average annual cash flow, and recommend the alternative that should be chosen.