All cash flows will occur in Mexico and are expressed in dollars. In an attempt to improve its economy, the Mexican 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.
If the company uses a required return of 15 percent on this project, what are the NPV and IRR of the project?
0 -1350000 1 525000 2 590000 3 485000 4 440000