Howell Petroleum, Inc., is trying to evaluate a generation project with the foll

Question

Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Required: (a) If the company requires a 8 percent return on its investments, what is the NPV of the project? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) NPV $ 4087105. (b) Compute the IRRs for this project. (Do not round intermediate calculations. Enter the positive value in the first answer box, and the negative value in the second answer box. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) Internal rate of return 23.42 % Internal rate of return %

Explanation / Answer

Year Cashflow(A) Cell Discount Factor@8% (B) Discounted Value(A*B) 0 -39500000 A1 1 -39500000 1 60500000 A2 0.926 56018518.52 2 -14500000 A3 0.857 -12431412.89 NPV=sum of cash flow 4087105.624 IRR using excel formulae=IRR(A1:A3,0.01) 23%

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