Rho Manufacturing Ltd.

Scenario: Rho Manufacturing Ltd. is planning to invest in a new production facility costing Rs.800,000. The facility has a life expectancy of 10 years with no salvage value. The tax rate is 28%. The company follows straight-line depreciation. The estimated cash flows before depreciation and tax (CFBT) from the facility are as follows:

Year	CFBT (Rs)
1	130,000
2	135,000
3	140,000
4	145,000
5	150,000
6	155,000
7	160,000
8	165,000
9	170,000
10	175,000

Compute the following:

1. Payback period
2. Average rate of return
3. NPV at 10% discount rate

Profitability Index at 10% discount rate