Question

In: Finance

Butler International Limited is evaluating a project in Erewhon. The project will create the following cash...

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

Year       Cash Flow

0             –$ 855,000

1                  255,000

2                 315,000

3                  374,000

4                  230,000

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 4 percent. If Butler uses a required return of 11 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?

Solutions

Expert Solution

­SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE


Related Solutions

Butler International Limited is evaluating a project in Erewhon. The project will create the following cash...
Butler International Limited is evaluating a project in Erewhon. The project will create the following cash flows:    Year Cash Flow 0 –$ 1,310,000 1 485,000 2 550,000 3 445,000 4 400,000    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...
Butler International Limited is evaluating a project in Erewhon. The project will create the following cash...
Butler International Limited is evaluating a project in Erewhon. The project will create the following cash flows:    Year Cash Flow 0 –$ 1,310,000 1 485,000 2 550,000 3 445,000 4 400,000    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...
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash...
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year 0 Cash Flow –$ 1,150,000 Year 1 Cash Flow $325,000 Year 2 Cash Flow $390,000 Year 3 Cash Flow $285,000 Year 4 Cash Flow $240,000 All cash flows will occur in Erewhon and are expressed in dollars. In an attempt to improve its economy, the Erewhonian government has declared that all cash flows created by a foreign company are “blocked” and must...
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash...
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year Cash Flow 0 –$ 1,275,000 1 435,000 2 505,000 3 415,000 4 345,000 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...
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash...
Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows:    Year Cash Flow 0 –$ 1,180,000 1 355,000 2 420,000 3 315,000 4 270,000    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...
Anderson international Limited is evaluating a project in Erewhon. The project will create the following cash...
Anderson international Limited is evaluating a project in Erewhon. The project will create the following cash flows: year Cash flow 0 -$1,190,000 1 365,000 2 430,000 3 325,000 4 280,000 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...
Anderson International Limited is evaluating a project in Erewhon. The project will create cash flows as...
Anderson International Limited is evaluating a project in Erewhon. The project will create cash flows as listed in the table below. 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 10%. The required return is 15%. What...
Anderson International is interested in investing a project in Erewhon with the following projected cash flows:...
Anderson International is interested in investing a project in Erewhon with the following projected cash flows: Year Cash flow $ 0 -1,200,000 1 350,000 2 400,000 3 600,000 4 350,000 5 380,000 One problem is that the Erewhon government has declared that all cash flows created by a foreign company must be reinvested in Erewhon for two years at the rate of 3.5%. Anderson’s required rate of return is 12%. What's the NPV of the project under the investment policy...
Solo Corp. is evaluating a project with the following cash flows:
Solo Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$ 28,500 1 10,700 2 13,400 3 15,300 4 12,400 5 – 8,900 The company uses a discount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Calculate the MIRR...
Solo Corp. is evaluating a project with the following cash flows:
Solo Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 –$ 28,500 1 10,700 2 13,400 3 15,300 4 12,400 5 – 8,900 The company uses a discount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Calculate the MIRR...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT