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Problem 3: An Engineering Company is considering an investment proposal to install new...

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Accounting

Problem 3:
An Engineering Company is considering an investment proposal to install new milling controls. The project cost is Rs.50,000. The facility has life of 5 years and no salvage value. The company's tax rate is 55%. The estimated cash flows before tax (CFBT) from the proposed investment proposal are as
follows:
4
Year CFBT(`)
110,000
211,000
314,000
415,000
525,000
Compute the following:
i) Pay- Back Period
ii) Average rate of return
iii) Net present value at 10% discount rate
iv) Profitability index at 10% discount rate
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