Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year Cash Flow 1,270,000 2$ 445,000 510,000 405,000 360,000 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 5 percent. If Anderson uses a required return of 12 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. Enter the IRR as a percent. Round your answers to 2 decimal places, e.g., 32.16.) NPV IRR
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year Cash Flow 1,270,000 2$ 445,000 510,000 405,000 360,000 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 5 percent. If Anderson uses a required return of 12 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. Enter the IRR as a percent. Round your answers to 2 decimal places, e.g., 32.16.) NPV IRR
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:and IRR
Anderson International Limited is evaluating a project in Erewhon. The project will create
the following cash flows:
Year
Cash Flow
1,270,000
24
445,000
510,000
405,000
360,000
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 5 percent.
If Anderson uses a required return of 12 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. Enter the IRR as a percent. Round your answers to 2
declmal places, e.g., 32.16.)
NPV
IRR
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