A large-sized chemical company is considering investing in a project that costs `5,00,000. The estimated salvage value is zero; tax rate is 35 per cent. The company uses straight line method of...

A large-sized chemical company is considering investing in a project that costs `5,00,000. The estimated salvage value is zero; tax rate is 35 per cent. The company uses straight line method of depreciation for tax purposes and the proposed project has cash flows before tax (CFBT) as follows:

Determine the following: (i) Payback period and (ii) Average rate of return.