Question
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year Cash Flow 0 $ 1,150,000 1 325,000
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: |
Year | Cash Flow | ||
0 | $ | 1,150,000 | |
1 | 325,000 | ||
2 | 390,000 | ||
3 | 285,000 | ||
4 | 240,000 | ||
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 6 percent on this project, what are the NPV and IRR of the project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) |
NPV | $ | |
IRR | % | |
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