【正文】 64 The Payback Period Rule? How long does it take the project to “pay back” its initial investment?? Payback Period = number of years to recover initial costs? Minimum Acceptance Criteria: – set by management? Ranking Criteria: – set by managementMcGrawHill/Irwin Copyright 169。 2023 by The McGrawHill Companies, Inc. All rights reserved.620Example of Investment RulesCompute the IRR, NPV, PI, and payback period for the following two projects. Assume the required return is 10%. Year Project A Project B0 $200 $1501 $200 $502 $800 $1003 $800 $150McGrawHill/Irwin Copyright 169。 2023 by The McGrawHill Companies, Inc. All rights reserved.616Calculating the Crossover RateCompute the IRR for either project “AB” or “BA”% = IRRMcGrawHill/Irwin Copyright 169。 2023 by The McGrawHill Companies, Inc. All rights reserved.60Chapter Outline Why Use Net Present Value? The Payback Period Rule The Discounted Payback Period Rule The Average Accounting Return The Internal Rate of Return Problems with the IRR Approach The Profitability Index The Practice of Capital Budgeting Summary and ConclusionsMcGrawHill/Irwin Copyright 169。 2023 by The McGrawHill Companies, Inc. All rights reserved.613The Scale ProblemWould you rather make 100% or 50% on your investments?What if the 100% return is on a $1 investment while the 50% return is on a $1,000 investment?McGrawHill/Irwin Copyright 169。 2023 by The McGrawHill Companies, Inc. All rights reserved.623Relationship Between NPV and IRRDiscount rateNPV for A NPV for B10% 0% 20% 40% 60% 80% 100% 120% McGrawHill/Irwin Copyright 169。 2023 by The McGrawHill Companies, Inc. All rights reser