A company has agreed to supply a quantity of sodium carbonate peroxyhydrate to various farmers in the central and southern Malaysian states for the next seven years.The manager estimates that the cash flows associated with the project will be as follows:

Outlays: Initial outlay (cost of building plant): $500000, payable immediately Manufacturing cost: $400000 per annum, payable annually for seven years, with the first payment being made in one years' time. Disposal of wastes and demolition plant: $275000 per annum payable annually for three years, the first payment being made in eight years' time.

Income: Sales of compound: $600000 per annum payable annually for seven years, the first income to be received in one years' time.

Interested with the prospect, The manager proposes to finance the project by borrowing the entire initial cost from a bank, which charges interest on loans at 13.75% per annum. Partial repayment of the loan will be allowed at any time and the loan will be repaid by installments as soon as possible from the profits on the manufacture and sales of the compound.

a) Find the discounted payback period (DPP) for the project. That is, after how many years will the bank loan be paid off?

b) After repayment of the bank loan the company will accumulate its profits in a deposit account at the bank, which pays 11% per annum interest on deposits. The cost of disposal of chemical waste and demolition of the plant will be met from this account. Calculate the anticipated balance in the company's deposit account when the projects ends in ten years' time.

c) Repeats when the interest on loan is charged at 15% per annum.