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Fanancial management

The City of Tshwane municipality wants to resolve the water reading problem by buying the new meter reader. The cost of acquiring a new meter reader is 9% of the purchase price. The water meter system is expected to have a scrap value of R4 000 000 in the fifth year. The acting Mayor provided the following stream of cash flows for this project at a public meeting. Year Expenditure Cash Flow (R) 0 Purchase price - 20 000 000 0 installation costs -3 000 000 1 Cash flow 5 000 000 2 Cash flow 13 000 000 3 Cash flow 10 000 000 4 Cash flow 8 000 000 5 Cash flow 4 000 000 a. Calculate the NPV of the project b. Calculate the IRR of the project C. Calculate the payback period of the new water meter system and decide whether the Tshwane City Council should accept or reject the project. The city council accepts a payback period of less than two years