Question
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year Cash Flow 0 -$1,300,000 1 $475,000 2
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows:
Year | Cash Flow |
0 | -$1,300,000 |
1 | $475,000 |
2 | $540,000 |
3 | $435,000 |
4 | $390,000 |
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 3 percent.
If Anderson uses a required return of 13 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 answers to 2 decimal places, e.g., 32.16. Enter your IRR as a percent.)
NPV $
IRR %
Please show work!
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