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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
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.
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