The Chum Company is considering the production of a new product line which will require an investment of P XXXXXXXXXXwith P XXXXXXXXXXsalvage value. The investment will have a useful life of ten years...

The Chum Company is considering the production of a new product line which will require an investment of P 3 000 000 with P 200 000 salvage value. The investment will have a useful life of ten years during which annual cash inflows before income tax of P 1 400 000 are expected. The income tax rate is 40%.

Required:

1. Annual net income


2. Average return on investment


3. Average return on average investment