Question
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year Cash Flow -$589,theta08 1 210,theta9theta 2 153,theta08
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year Cash Flow -$589,theta08 1 210,theta9theta 2 153,theta08 3 218,theta00 4 197,theta00 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. Reterences The reinvestment rate for these funds is 5 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
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