Howell Petroleum, Incorporated, is trying to evaluate a generation project with the following cash flows: Year 0 1 2 Cash Flow -$ 44,000,000 69,500,000 -19,000,000 a. If the company requires a return of 9 percent on its investments, what is the NPV of the project? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. Compute the IRRS for this project. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16 Enter the larger IRR in the first answer box and the smaller IRR in the second answer box. If you can only calculate one IRR enter it in both boxes to receive partial credit. A negative answer should have a minus sign. a. NPV b. Larger IRR Smaller IRR % %
Howell Petroleum, Incorporated, is trying to evaluate a generation project with the following cash flows: Year 0 1 2 Cash Flow -$ 44,000,000 69,500,000 -19,000,000 a. If the company requires a return of 9 percent on its investments, what is the NPV of the project? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. Compute the IRRS for this project. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16 Enter the larger IRR in the first answer box and the smaller IRR in the second answer box. If you can only calculate one IRR enter it in both boxes to receive partial credit. A negative answer should have a minus sign. a. NPV b. Larger IRR Smaller IRR % %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Please show how you got the answers as if you were doing it on paper. Do not use excel.
Transcribed Image Text:Howell Petroleum, Incorporated, is trying to evaluate a generation project with the following cash flows:
Year
0
1
2
Cash Flow
-$ 44,000,000
69,500,000
-19,000,000
a. If the company requires a return of 9 percent on its investments, what is the NPV of the project?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
b. Compute the IRRs for this project.
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
Enter the larger IRR in the first answer box and the smaller IRR in the second answer box. If you can only calculate one IRR,
enter it in both boxes to receive partial credit. A negative answer should have a minus sign.
a. NPV
b. Larger IRR
Smaller IRR
%
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