Question #12 Please Show Work

CHAPTER 8 Net Present Value and Other Investment C 267 with IRR. Howell Petroleum, Inc., is trying to evaluate a 12. Problems generation project with the following cash flows: Year Cash Flow 0$39,000,000 57,000,000 - 9.000,000 If the company requires a return of 10 percent on its investments, should it accept this project? Why? Compute the IRR for this project. How many IRRs are there? If you apply the IRR decision rule, should you accept the project or not? What's going on here a. b. 13. Calculating Profitei What is the profitability index for the 06 following set of cas flows if the televant discount rate is 10 percent? What if the discount rate ispacer? If it is 22 percent? Yeas Cash Fiow $27,500 15,800 13,600 8,300 LO4 14. Problems with Profitability Index. The Matterhorn Corporation is trying to LO 6 choose between the following two mutually exclusive design projects: Year Cash Flow 1) Cash Flow (1) -$78,000 28,300 34,800 43,700 -$28,800 9,600 7,400 15,600 If the required return is 11 percent and the company applies the a. profitability index decision rule, which project should the firm accept? b. If the company applies the NPV decision rule, which project should it take? c. Explain why your answers in parts (a) and (b) are different. exclusive projects: 15. Comparing Investment Criteria. Consider the following two mutually LO 1 LO 3 L0 4 LO 6 Year Cash Flow (A) Cash Flow (B) -$235,000 29,000 45,000 51,000 325,000 $47,000 28,700 19,900 17,300 16,200 o 4