i. (1.) What is the payback period? Find the paybacks for Franchises L and S. Franchise S 2 50 Time period: Cash flow:(100) 70 20 Cumulative cash flow: Payback: Franchise L 2 60 Time period: Cash flow:(100) 10 80 Cumulative cash flow: (2.) What is the rationale for the payback method? According to the payback criterion, which franchise or franchises should be accepted if the firm's maximum acceptable payback is 2 years, and if Franchise L and S are independent? If they are mutually exclusive? Answer: See Chapter 12 Mini Case Show