Question
Light Sweet Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year Cash Flow 0 $45,000,000 1 71,000,000 2 15,000,000
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Light Sweet Petroleum, Inc., is trying to evaluate a generation project with the following cash flows:
| Year | Cash Flow |
| 0 | $45,000,000 |
| 1 | 71,000,000 |
| 2 | 15,000,000 |
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If the company requires a return of 12 percent on its investments, should it accept this project? Why?
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Compute the IRR for this project. How many IRRs are there? Using the IRR decision rule, should the company accept the project? Whats going on here?
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Public Finance In Theory And Practice
Authors: Richard Abel Musgrave, Peggy B. Muscrave
5th Edition
0070441278, 978-0070441279
