NPV and IRR: Unequal Annual Net Cash Inflows

Assume that

Goodrich Petroleum Corporation is evaluating a capital expenditure proposal

that has the following predicted cash flows:

Initial investment..........................................................$(82,850)

Operation

Year 1 .................................................................30,000

Year 2 .................................................................50,000

Year 3 .................................................................40,000

Salvage .................................................................0

Required

a. Using a discount rate of 12 percent, determine the net present value of the investment

proposal.

b. Determine the proposals internal rate of return. (Refer to Appendix 12B if you use the table

approach.)

PLEASE SHOW WORK