Problem $3$:

An Engineering Company is considering an investment proposal to install new milling controls. The project cost is Rs$.50,000.$ The facility has life of $5$ years and no salvage value. The company's tax rate is $55\%.$ The estimated cash flows before tax $($CFBT$)$ from the proposed investment proposal are as

follows:

$4$

Year $CFBT(`)$

$110,000$

$211,000$

$314,000$

$415,000$

$525,000$

Compute the following:

i$)$ Pay$-$ Back Period

ii$)$ Average rate of return

iii$)$ Net present value at $10\%$ discount rate

iv$)$ Profitability index at $10\%$ discount rate