Problem: Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows:
Year Cash Flow
|
0
|
-$ 468,000
|
|
1
|
183,000
|
|
2
|
208,000
|
|
3
|
223,000
|
|
4
|
201,000
|
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 8.5 percent. Anderson uses a 15.5 percent required return on this project.
Required to do:
(a) What is the NPV of the project? (Round your answer to 2 decimal places, e.g. 32.16.)
(b) What is the IRR of the project? (Do not include the percent sign (%). Round your answer to 2 decimal places, e.g. 32.16.)
(c) Is the IRR you calculated the MIRR of the project?