Howell Petroleum, Ic., is trying to evaluate a generation project with the following cashflows:YearCash Flow-$41,000,00063,500,000-16,000,00012a. If the company requires a return of 12 percent on its investments, what is the NPV ofthe project? (Do not round intermediate calculations and round your answer to 2decimal places, e.g., 32.16.)b. Compute the IRRS for this project. (Do not round intermediate calculations and enteryour answers as a percent rounded to 2 decimal places, e.g., 32.16. Enter the largerIRR in the first answer box and the smaller IRR in the second answer box. If you canonly calculate one IRR, enter it in both boxes to receive partial credit. A negativeanswer should have a minus sign.)a. NPVb. Larger IRRSmaller IRR%%

Capital budgeting is the process by which a corporation examines potential large projects or…

Answered: -$41,000,000 63,500,000 -16,000,000…

Business

Finance

-$41,000,000 63,500,000 -16,000,000 company requires a re roject? (Do not round

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 13P

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Concept explainers

Fringe Benefit Tax

Fringe benefits are in addition to the compensation that companies give to their employees. It is an additional benefit above the stated salary. It helps to keep the employees of the firm motivated as sometimes the only salary is not enough to retain the quality employees of the firm. There are different types of fringe benefits. Fringe benefits are given in both private as well as public enterprises.

Question

Howell Petroleum, Ic., is trying to evaluate a generation project with the following cash
flows:
Year
Cash Flow
-$41,000,000
63,500,000
-16,000,000
1
2
a. If the company requires a return of 12 percent on its investments, what is the NPV of
the project? (Do not round intermediate calculations and round your answer to 2
decimal places, e.g., 32.16.)
b. Compute the IRRS for this project. (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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