Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year O 1234 Cash Flow -$ NPV IRR 1,320,000 495,000 560,000 455,000 410,000 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 3 percent. If Anderson uses a required return of 14 percent on this project, what are the NPV and IRR of the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Enter your IRR as a percent.) %
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year O 1234 Cash Flow -$ NPV IRR 1,320,000 495,000 560,000 455,000 410,000 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 3 percent. If Anderson uses a required return of 14 percent on this project, what are the NPV and IRR of the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Enter your IRR as a percent.) %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Anderson International Limited is evaluating a project in Erewhon. The project will create
the following cash flows:
Year
O
1
2
3
4
Cash Flow
-$
NPV
IRR
1,320,000
495,000
560,000
455,000
410,000
All cash flows will occur in Erewhon and are expressed 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 3 percent. If Anderson
uses a required return of 14 percent on this project, what are the NPV and IRR of the
project? (A negative answer should be indicated by a minus sign. Do not round
intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
Enter your IRR as a percent.)
%
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