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Anderson International Limited is evaluating a project in Erewhon.

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Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows;Year Cash Flows;0 -$750,000;1 205,000;2 265,000;3 346,000;4 220,000;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 Anderson uses an 11 percent required return on this project, what is the NPV of the project?

 

Paper#30401 | Written in 18-Jul-2015

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