NPV and IRR Gulliver International Limited is evaluating a project in Lilliput. The project will create the following cash flows:

Year Cash flow (LP)

0 –750,000 1 205,000 2 265,000 3 346,000 4 220,000 All cash flows will occur in Lilliput and are expressed in Lilliputian pounds (LP). In an attempt to improve its economy, the Lilliputian 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 per cent. If Gulliver uses an 11 per cent required return on this project, what are the NPV and IRR of the project? Is the IRR you calculated the MIRR of the project? Why or why not?