ABC Ltd is evaluating a new project with the following forecasted details Initial amount invested is R600,000 and expected residual value is R60,000 Year Cashflows Discount factor Year 1 R110,000 0 909 Year 2 R190,000 0 826 Year 3 R170,000 0 751 Year 4 R110,000 0 683 Year 5 R100,000 0 621 Assuming that the cost of capital for the company is 12 The cash flows are after tax and depreciation is charged at R50,000 per year Tax rate is 25 Required 1 1 Calculate each of the following 1 1 1 Net Present Value (NPV) 1 1 2 Internal Rate of Return (IRR)

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Question: ABC Ltd is evaluating a new project with the following forecasted details: Initial amount invested is R600,000 and expected residual value is R60,000. Year Cashflows

ABC Ltd is evaluating a new project with the following forecasted details: Initial amount invested is R600,000 and expected residual value is R60,000.

Year	Cashflows	Discount factor
Year 1	R110,000	0.909
Year 2	R190,000	0.826
Year 3	R170,000	0.751
Year 4	R110,000	0.683
Year 5	R100,000	0.621

Assuming that the cost of capital for the company is 12%. The cash flows are after tax and depreciation is charged at R50,000 per year. Tax rate is 25%.

Required: 1.1 Calculate each of the following: 1.1.1 Net Present Value (NPV) 1.1.2 Internal Rate of Return (IRR)

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