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Franklin Ltd is assessing a project with these financial projections:
- Initial amount invested is R1,000,000 with an expected residual value of R90,000.
Year | Cashflows | Discount factor |
Year 1 | R150,000 | 0.909 |
Year 2 | R170,000 | 0.826 |
Year 3 | R180,000 | 0.751 |
Year 4 | R130,000 | 0.683 |
Year 5 | R140,000 | 0.621 |
Cost of capital is 9%. Depreciation is R80,000 per year. Tax rate is 28%.
Required:
- Calculate each of the following:
- 1.6.1 Net Present Value (5)
- 1.6.2 Internal Rate of Return (5)
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