Question: Anderson International Limited is evaluating a project in Erewhon. The project will make the following cash flows:
|
Year
|
T-bill return
|
|
0
|
-$ 458,000
|
|
1
|
173,000
|
|
2
|
198,000
|
|
3
|
213,000
|
|
4
|
191,000
|
All cash flows will occur in Erewhon and are expressed in $. In an attempt to improve its economy, the Erewhonian government has confirmed that all cash flows created by a foreign company are "blocked" and must be reinvested with the government for one year. The reinvestment value for these funds is 8%. Anderson uses a 15% required return on this project.
Required:
[A] Calculate the NPV of the project? [Give your answer to two decimal places]
NPV $_________
[B] Calculate the IRR of the project? [Do not include the [%] sign. Give your answer to 2 decimal places]
IRR ______%
[C] Is the IRR you computed the MIRR of the project?