Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year 0 1 2 Cash Flow -$38,000,000 57,500,000 -13,000,000 a. If the company requires a return of 11 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

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Chapter19: Capital Investment
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Problem 22E
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Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash
flows:
Year
O
1
2
Cash Flow
-$38,000,000
57,500,000
-13,000,000
a. If the company requires a return of 11 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
3,250,950.00
23.65 %
%
Transcribed Image Text:Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year O 1 2 Cash Flow -$38,000,000 57,500,000 -13,000,000 a. If the company requires a return of 11 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 3,250,950.00 23.65 % %
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