Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year ....................

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Howell Petroleum, Inc., is trying to evaluate a generation project with the following cash flows:

Year .................... Cash Flow
    0 .................... −$52,000,000
    1 ........................ 74,000,000
    2 ..................... − 12,000,000

a. If the company requires a return of 12 percent on its investments, should it accept this project? Why?

b. Compute the IRR for this project. How many IRRs are there? Using the IRR decision rule, should the company accept the project? What’s going on here?

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Related Book For  book-img-for-question

Fundamentals Of Corporate Finance

ISBN: 9781265553609

13th Edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan

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