1. Calculate the average rate on investment over the project life.

2. Calculate the payback period.

FCI $16,000,000 Working Capital 15% Depreciation Straight Line Variable Production Costs $A/Kg Fixed Charges (except for depreciation) $455000/y! Overhead $300000/y! General Expenses $165000/y Sale price of product $12/kg 1,000,000kg at full capacity, in first year 70% full capacity, Annual Production second year 90% full capacity, full capacity from third year on Tax Rate 35% Working Capital Recovered as Lump Sum at the End FCI $16,000,000 Working Capital 15% Depreciation Straight Line Variable Production Costs $A/Kg Fixed Charges (except for depreciation) $455000/y! Overhead $300000/y! General Expenses $165000/y Sale price of product $12/kg 1,000,000kg at full capacity, in first year 70% full capacity, Annual Production second year 90% full capacity, full capacity from third year on Tax Rate 35% Working Capital Recovered as Lump Sum at the End