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Company: Omicron Healthcare Ltd. Scenario: Omicron Healthcare Ltd. is planning to invest in a new patient monitoring system costing Rs.650,000. The system has a life

Company: Omicron Healthcare Ltd.

Scenario: Omicron Healthcare Ltd. is planning to invest in a new patient monitoring system costing Rs.650,000. The system has a life expectancy of 7 years with no salvage value. The tax rate is 32%. The company follows straight-line depreciation. The estimated cash flows before depreciation and tax (CFBT) from the system are as follows:

Year

CFBT (Rs)

1

100,000

2

105,000

3

110,000

4

115,000

5

120,000

6

125,000

7

130,000

Compute the following:

  1. Payback period
  2. Average rate of return
  3. NPV at 11% discount rate
  4. Profitability Index at 11% discount rate

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