QUESTION FOUR [25]

As the financial manager of Nolo Ltd, you are required to analyse two proposed capital investments, namely Projects DA and TZ. Each has a cost of R100 000, and the cost of capital for each project is 12%. Depreciation on each project is estimated at R25 000 per year. The projects expected net profit (loss) are as follows:

Year	Project DA	Project TZ
1	R40 000	R10 000
2	R5 000	R10 000
3	R5 000	R10 000
4	(R15 000)	R10 000

4.4 Calculate the internal rate of return for project TZ. (7)