Question
I've been trying to do this problem for a while now but I'm not understanding how to do it correctly. I have followed several examples
I've been trying to do this problem for a while now but I'm not understanding how to do it correctly. I have followed several examples but they all show different processes and don't create the same solution.
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: |
Year | Cash Flow | ||
0 | $ | 1,230,000 |
|
1 |
| 405,000 |
|
2 |
| 470,000 |
|
3 |
| 365,000 |
|
4 |
| 320,000 |
|
|
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 4 percent. |
If Anderson uses a required return of 10 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 |
| % |
|
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