Adl Ltd has a choice of investing in one of two projects. The following details relate to

these projects:

Investment required

Expected economic lifetime

Minimum required rate of return

Net annual cash inflows

$1$

st year

$2$

nd year

$3$

rd year

$4$

th year

$5$

th year

$6$

th year

Project A

R$75000$

$6$ years

$12\%$

R$20000$

R$22000$

R$24000$

R$26000$

R$23000$

R$21000$

Project B

R$75000$

$6$ years

$12\%$

R$22000$

R$22000$

R$22000$

R$22000$

R$22000$

R$22000$

Required:

$1\mathrm{.}2\mathrm{.}1$ Use the net present value method to determine which project Adl Ltd should choose

$1\mathrm{.}2\mathrm{.}2.$ Calculate the Internal Rate of Return for project B