Question

Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash...

Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows:

Year Cash Flow
0 –$576,000   
1 206,000   
2 149,000   
3 214,000   
4 193,000   

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. Assume Anderson uses a required return of 11 percent on this project.

a. What is the NPV of the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b. What is the IRR of the project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash...
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year Cash Flow 0 –$590,000 1 220,000 2 163,000 3 228,000 4 207,000 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...
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash...
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year Cash Flow 0 –$585,000    1 215,000    2 158,000    3 223,000    4 202,000    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....
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash...
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year Cash Flow 0 –$582,000    1 212,000    2 155,000    3 220,000    4 199,000    All cash flows will occur in Erewhon and are expressed in dollars. In an attempt to improve its economy, the Erewhonian government has declared that all cash flows created by a foreign company are “blocked” and must be reinvested with the government for one year....
Butler International Limited is evaluating a project in Erewhon. The project will create the following cash...
Butler International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year Cash Flow 0 –$ 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...
Anderson International is interested in investing a project in Erewhon with the following projected cash flows:...
Anderson International is interested in investing a project in Erewhon with the following projected cash flows: Year 0--> $ -1,000,000 Year 1--> $ 250,000 Year 2--> $ 300,000 Year 3--> $ 350,000 Year 4--> $500,000 One problem is that the Erewhon government has declared that all cash flows created by a foreign company must be reinvested in Erewhon for TWO years at the rate of 4%. Anderson's required rate of return is 10%. Show all future cash flows of the...
Problem 9-20 MIRR [LO6] RAK Corp. is evaluating a project with the following cash flows:   ...
Problem 9-20 MIRR [LO6] RAK Corp. is evaluating a project with the following cash flows:    Year Cash Flow 0 –$ 30,000 1 12,200 2 14,900 3 16,800 4 13,900 5 – 10,400    The company uses a discount rate of 12 percent and a reinvestment rate of 7 percent on all of its projects.    Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2...
Fuente, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1...
Fuente, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1 $1070 2 $1300 3 $1520 4 $2260 a. If the discount rate is 8 percent, what is the future value of these cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If the discount rate is 11 percent, what is the future value of these cash flows in Year 4? (Do not...
A project has the following cash flows: Year Cash Flow 0 $ 72,500 1 –51,500 2...
A project has the following cash flows: Year Cash Flow 0 $ 72,500 1 –51,500 2 –28,000 What is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Internal rate of return             % What is the NPV of this project if the required return is 6 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your...
Fuente, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1...
Fuente, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1 $ 1,090 2 1,320 3 1,540 4 2,280 a. If the discount rate is 7 percent, what is the future value of these cash flows in Year 4?(Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. If the discount rate is 13 percent, what is the future value of these cash flows in Year 4? (Do not...
A project has the following cash flows: Year Cash Flow 0 –$ 16,600 1 7,300 2...
A project has the following cash flows: Year Cash Flow 0 –$ 16,600 1 7,300 2 8,600 3 7,100 What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) What is the NPV at a discount rate of 12 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) What is the NPV at a discount rate...