Anderson International Limited is evaluatingproject in Erewhon. The project will create the following cashaflows:Cash FlowYear-$1,310,000485,000550,000445,000400,0000124All cash flows will occur in Erewhon and are expressed in dollars. In an attempt to improve its economy, theErewhonian government has declared that all cash flows created by a foreign company are "blocked" andmust 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 andround your final answers to 2 decimal places. (e.g., 32.16))$103,669.03NPVIRR

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Asked Oct 10, 2019
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Need help with NPV and IRR

Anderson International Limited is evaluating
project in Erewhon. The project will create the following cash
a
flows:
Cash Flow
Year
-$1,310,000
485,000
550,000
445,000
400,000
0
1
2
4
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 final answers to 2 decimal places. (e.g., 32.16))
$
103,669.03
NPV
IRR
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Anderson International Limited is evaluating project in Erewhon. The project will create the following cash a flows: Cash Flow Year -$1,310,000 485,000 550,000 445,000 400,000 0 1 2 4 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 final answers to 2 decimal places. (e.g., 32.16)) $ 103,669.03 NPV IRR

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Expert Answer

Step 1

Reinvestment Rate = 3% or 0.03

Cash Flow = Old Cash Flow × (1 + Reinvestment Rate)

 

Calculation of NPV and IRR using Excel:

IRR is calculated using IRR function of excel:

To open the "IRR function" window - MS-Excel --> Formulas --> Financials --> IRR.

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Step 2

The result of above tabl...

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