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Problem - NPV and IRR
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 rate for these funds is 3 percent.
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