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 $(160,000)

Operation Year 1 42,000 Year 2 95,000 Year 3 65,000 Salvage 0

a. Using a discount rate of 10%, determine the net present value of the investment proposal. $Answer

b. Determine the proposals internal rate of return. (Refer to Appendix 24B if you use the table approach.) Hint: You will need to use a trial-and-error approach. Round to the nearest percent. (Example: 0.15268 = 15%).

Answer 12 %