Q. A chemical company is considering investment in a project that costs Rs.500000. The life of the project is 5 years and estimated salvage value is zero. Tax rate is 55%. The company uses straight line depreciation and proposed project has earnings before depreciation and before tax as follows:

Year	Earnings before depreciation & tax (Rs)	PV factor @15%
1	1,00,000	0.870
2	1,00,000	0.756
3	1,50,000	0.658
4	1,50,000	0.572
5	2,50,000	0.497

Calculate the following: -

1. Payback period

2. Average rate of return if po

3. Net present value @15%