A company is considering an investment proposal to instal new milling controls at a cost of `50,000. The facility has a life expectancy of 5 years and no salvage value. The tax rate is 35 per cent....

A company is considering an investment proposal to instal new milling controls at a cost of `50,000. The facility has a life expectancy of 5 years and no salvage value. The tax rate is 35 per cent. Assume the firm uses straight line depreciation and the same is allowed for tax purposes. The estimated cash flows before depreciation and tax (CFBT) from the investment proposal are as follows:

Compute the following:

(i) Pay back period.

(ii) Average rate of return.

(iii) Internal rate of return.

(iv) Net present value at 10 per cent discount rate.