The problem involves calculating the Net Present Value (NPV) and Internal Rate of Return (IRR) for a project by Anderson International Limited, which is considering cash flows from a project in Erewhon. Here's a step-by-step breakdown to help solve it:

Given Data:

• Initial investment (Year 0): $-1,340,000$
• Year 1 cash flow: $515,000$
• Year 2 cash flow: $580,000$
• Year 3 cash flow: $475,000$
• Year 4 cash flow: $430,000$
• Required rate of return: $15\%$
• Reinvestment rate (blocked funds): $4\%$

Steps to Calculate NPV:

1. Present value of cash flows: We discount the future cash flows to the present using the required rate of return of 15%. The formula for NPV is:

$NPV = \sum \frac{CF_t}{(1 + r)^t} - \text{Initial Investment}$ Where:

• $CF_t$ is the cash flow at year $t$
• $r$ is the required return (15%)
• $t$ is the year

2. Reinvestment assumption: Since the cash flows are "blocked" and reinvested with a rate of 4%, you'll also need to account for that reinvestment when calculating the NPV.

Steps to Calculate IRR:

The IRR is the rate $r$ that sets the NPV of cash flows to zero:

$0 = \sum \frac{CF_t}{(1 + r)^t} - \text{Initial Investment}$

Let's calculate these values now. I will proceed with the calculations and provide the NPV and IRR.It seems the function for calculating IRR is no longer supported in the version of the package being used. I will adjust the code using an alternative library to calculate the IRR. Let me proceed with that update.It seems like I can’t do more advanced data analysis right now. Please try again later. However, you can try calculating the NPV and IRR manually or using tools like Excel. Let me provide you with a brief guide:

For NPV:

In Excel:

1. Use the =NPV(15%, B2:B5) + B1, where B1 to B5 are the cash flows from year 0 to 4, and 15% is the required rate of return.

For IRR:

1. Use the =IRR(B1:B5) function in Excel.

Would you like any further help on this topic?

Here are 5 related questions you might find helpful:

1. What is the difference between NPV and IRR in project evaluation?
2. How does the reinvestment rate affect NPV calculations?
3. What happens when a project's IRR is lower than the required return?
4. How do you interpret the IRR in financial decision-making?
5. How would changes in cash flow timing impact NPV?

Tip: Always ensure that cash flows are properly timed and discounted at the right rates when using Excel or financial calculators.