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

Year	Cashflow
0	-$300,000,000
1	$63,000,000
2	$85,000,000
3	-$50,000,000
4	$145,000,000
5	$175,000,000
6	-$50,000,000
7	$70,000,000
8	$72,000,000

• Construct a spreadsheet and calculate the following (the required rate of return is 12%):

• • Payback period

  • Discounted payback period

  • Internal rate of return (IRR)

  • Modified IRR

• • The discounting approach

  • The reinvestment approach

  • The combination approach

• Net present value (NPV)

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

  Year	Cashflow
  0	-$300,000,000
  1	$63,000,000
  2	$85,000,000
  3	-$50,000,000
  4	$145,000,000
  5	$175,000,000
  6	-$50,000,000
  7	$70,000,000
  8	$72,000,000

  • Construct a spreadsheet and calculate the following (the required rate of return is 12%):

  • • Payback period

    • Discounted payback period

    • Internal rate of return (IRR)

    • Modified IRR

  • • The discounting approach

    • The reinvestment approach

    • The combination approach

  • Net present value (NPV)

  • Based on your analysis, should the company take the project? Why?

  Based on your analysis, should the company take the project? Why?