Gumede (Pty) Ltd has the opportunity to invest in a project with the following estimated future cash flows:

Year

1 R300 000

2 R360 000

3 R460 000

4 R380 000

5 R240 000

The cost of the project is R900 000. The companys required rate of return (cost of capital) is 10%. The project has a zero residual value. Ignore taxation.

You are required to:

Determine the following for the project:

a) Net present value. (15)

15b) Gumede (Pty) LTD have decided to open a subsidiary in Kuala Lumpur in Malaysia called Grand Hyatt with the following cash flows in US$

Year	Cash flows
0	(190 000)
1	56 000
2	54 000
3	45 000
4	25 000
5	35 000
6	15 000
7	12 500
8	17 500

b) Calculate the internal rate of return of the Grand Hyatt project (10)