Calculation of Arithmetic ,Geometric Mean and NPV .
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows:
|
Year
|
Cash Flow
|
|
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 dollars. In an attempt to improve its economy, the Erewhon government has decided 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 is 8 percent. Anderson uses a 15 percent required return on this project.
Required:
(a) What is the NPV of the project? (Round your answers to 2 decimal places, e.g. 32.16.)
NPV $ _____
(b) What is the IRR of the project? (Do not include the percent sign (%). Round your answers to 2 decimal places, e.g. 32.16.)
IRR _____ percent
(c) Is the IRR you calculated the MIRR of the project?
A.Yes
B.No