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

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

YearCash Flow
0-862000
1303800
2219700
3320000
4288700

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? Is the IRR you calculated the MIRR of the project? Why or why not?

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Related Book For  answer-question

Essentials of Corporate Finance

ISBN: 978-1259277214

9th edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

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