Iota Chemicals Ltd.

Scenario: Iota Chemicals Ltd. is planning to invest in a new mixing plant for Rs.350,000. The plant has a life expectancy of 7 years with no salvage value. The tax rate is 27%. The company uses straight-line depreciation. The estimated cash flows before depreciation and tax (CFBT) from the plant are as follows:

Year	CFBT (Rs)
1	70,000
2	75,000
3	80,000
4	85,000
5	90,000
6	95,000
7	100,000

Compute the following:

1. Payback period
2. Average rate of return
3. NPV at 9% discount rate
4. Profitability Index at 9% discount rate