Question E25-20: 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 $(85,000)

Operation - Year 1 $30,500

Year 2 $60,000

Year 3 $31,000

Salvage $0

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

b. Determine the proposals internal rate of return. (Refer to Appendix 25B if you use the table approach.) Hint: You will need to use a trial-and-error approach.