(b) You have been given the information below with respect to projects A and
B in Mobutu Limited.
Project A
Cashflow
Project B
Cashflow
Year
0
(30,000)
(300,000)
1
7,200
69,000
2
8,640
79,200
3
10,380
91,200
4
12,420
105,000
5
14,940
120,600
Mobutu Limited has an average cost of capital of 10%
Required:
i.
Calculate Net Present Value
ii.
The Internal Rate of Return.
(12 marks)
(Total: 20 marks)