Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Cash Flow -$ 583,000 213,000 156,000 221,000 200,000 Year 0 1 2 3 4 All cash flows will occur in Erewhon and are expressed in dollars. In an attempt to improve its economy, the Erewhonian government has declared that all cash flows created by a foreign company are "blocked" and must be reinvested with the government for one year. The reinvestment rate for these funds is 4 percent. Assume Anderson uses a required return of 11 percent on this project. a. What is the NPV of the project? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What is the IRR of the project? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Cash Flow -$ 583,000 213,000 156,000 221,000 200,000 Year 0 1 2 3 4 All cash flows will occur in Erewhon and are expressed in dollars. In an attempt to improve its economy, the Erewhonian government has declared that all cash flows created by a foreign company are "blocked" and must be reinvested with the government for one year. The reinvestment rate for these funds is 4 percent. Assume Anderson uses a required return of 11 percent on this project. a. What is the NPV of the project? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What is the IRR of the project? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

Name: Anderson International Limited is evaluating a project in Erewhon. Th
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Description: Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows:Cash Flow-$ 583,000213,000156,000221,000200,000Year01234All cash flows will occur in Erewhon and are expressed in dollars. In an atte

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter14: Multinational Capital Budgeting

Section: Chapter Questions

Problem 3ST

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