Question
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year Cash Flow 0 $593,000 1 223,000 2
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: |
Year | Cash Flow |
0 | $593,000 |
1 | 223,000 |
2 | 166,000 |
3 | 231,000 |
4 | 210,000 |
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 6 percent. Assume Anderson uses a required return of 13 percent on this project. |
Requirement 1: |
What is the NPV of the project? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places (e.g., 32.16).) |
Net present value | $ |
Requirement 2: |
What is the IRR of the project? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
Internal rate of return | % |
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