Comparison of approaches to capital budgeting. (22-25 minutes)

Bayern-Bauwerk is thinking of buying, at a cost of EUR 220,000, some new packaging equipment that is expected to save EUR 50,000 in cashoperating 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%.  koi7 REQUIRED 1. Calculate the payback period.

Calculate the net present value.

Calculate the internal rate of return.

Calculate the accounting rate of return based on net initial investment.

Assume straight-line depreciation.