Evaluate generation project with the cash flows

Assignment Help Financial Management
Reference no: EM131176704

Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year Cash Flow 0 –$43,000,000 1 67,500,000 2 –18,000,000

Required:

(a) If the company requires a 11 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 $ 3,201,607.01

(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 22.93 % Internal rate of return %

Reference no: EM131176704

Questions Cloud

What is the present value of the break-even point : Luke Athletics Inc. has purchased a $200,000 machine to produce tennis balls. The machine will be fully depreciated by the straight-line method for its economic life of five years and will be worthless after its life. What is the present value of the..
How and where is the drug broken down in the body : How does the drug travel through the body? Where does the drug work in the body? What neurotransmitters are involved?
Different types of customers : Describe Dell's approach for site design and promotion to deliver relevant offers for different types of customers.
What do such plans have to take into account : For an organization on its decision on which products and services to develop, price it develops plans and strategies that outline how they want to go about this process. What do such plans have to take into account?
Evaluate generation project with the cash flows : Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: If the company requires a 11 percent return on its investments, what is the NPV of the project? Compute the IRRs for this project.
Explain your point of view on alliance system including hope : Take the perspective of a European citizen of a nation not considered a world power. Explain your point of view on the alliance system including hopes or fears due to the swift changes.
Current iso standard on risk management : Outline the Purpose and key process elements of the current ISO standard on Risk Management
How modern ethical thinkers hobbes and hume might respond : In your view, was Nelson Mandela justified in the use of violence to resist the apartheid government of South Africa? Reflect on how early modern ethical thinkers Hobbes, Hume, and Kant might respond to this issue.
Calculate the payback period for the machine : The cost of a new machine is $250000 the machine had a 10 years life and no salvage if the cash inflow generated each year as a result of the investment   in this new machine is equal to 25% of the cost of the machine calculate the payback period for..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Benefits consultant reviewing disability coverages offered

You are benefits consultant reviewing the disability coverage’s offered by one of your client firms. The disability plan of the firm offers provides short-term benefits equal to 100% of salary for 3 full years and long-term lifetime benefits equal to..

  Analyzes a legalethical issue or situation relating to a

prepare an 11- to 15-page paper excluding title page and reference page that analyzes a legalethical issue or situation

  Retail sales tax has become a popular way to finance state

The retail sales tax has become a popular way to finance state, county, and city governments as well as special districts. Which of these governments is the retail sales tax the best suited for and why? Which is it least suited for and why?

  The yield to maturity on one-year zero-coupon bonds

The yield to maturity on one-year zero-coupon bonds is 7.8%. The yield to maturity on two-year zero-coupon bonds is 8.8%. What is the forward rate of interest for the second year?  If you believe in the liquidity preference theory, is your best guess..

  What was the stocks return for the missing year

You find a certain stock that had returns of 13 percent, −12 percent, 25 percent, and 21 percent for four of the last five years. The average return of the stock over this period was 12.16 percent. What was the stock’s return for the missing year?

  Calculate each projects payback NPV and IRR

Assume you are the CFO at Porter Memorial Hospital. The CEO has asked you to analyze 2 proposed capital investments- Project X and Project Y. Each project requires a net investment outlay of $ 10,000, and the opportunity cost of capital for each proj..

  Taxicorp is entirely financed with equity

TaxiCorp is entirely financed with equity. Its risk premium is 14%. TaxiCorp calculates that a new project has a return of 16.5%. What other information is necessary to determine whether TaxiCorp should take the project? When should TaxiCorp accept t..

  How much would the reduction in assets improve the ROE

Last year Kruse Corp had $420,000 of assets, $403,000 of sales, $28,250 of net income, and a debt-to-total-assets ratio of 39%. Sales, costs, and net income would not be affected, and the firm would maintain the same debt ratio (but with less total d..

  Difference between the present value of the settlement

A brilliant young scientist is killed in a plane crash. It is anticipated that he could have earned $240,000 a year for the next 50 years. The attorney for the plaintiff’s estate argues that the lost income should be discounted back to the present at..

  How important is it to adhere to these standards

How important is it to adhere to these standards? Is there any point in time in which you can loosely interpret or manipulate these standards? What is due professional care, and how does it refer to the GAAS?

  Calculate the payments and loan balances for years

A basic 30-year ARM is made for $300,000 with an initial interest rate of 2%. Payments are monthly. The rate will reset every year. The index is the one-year Treasury and there is a 2% margin. There are no relevant caps. Calculate the payments and lo..

  What is the average defection rate for grocery store

What is the average defection rate for grocery store shoppers in a local area of a large city if they spend $50 per visit, shop 52 weeks per year.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd