1. A company is considering to purchase a plant. Two plants are available X and Y each costing $50,000. The annual cash flows are expected as below:

ACFS

YearPlant XPlant Y

1$15,000$5,000

220,000 15

325,00020

415,00030

510,00020

Further information:

a)Depreciation is charged on straight line basis

b)Cost of capital is 10%

c)No salvage value

Calculate

1)Payback period

2)Accounting rate of return

3)Net present value