Question
In: Finance
Light Sweet Petroleum, Inc., is trying to evaluate a generation project with the following cash flows:...
Light Sweet Petroleum, Inc., is trying to evaluate a generation project with the following cash flows:
Year
0 –$ 38,400,000
1- 62,400,000
2 – 11,400,000
a-1 What is the NPV for the project if the company requires a return of 10 percent?
a-2 Should the company accept this project? Yes or No?
b. The project has two IRR'S, namely _____ percent and _____ percent, in order from smallest to largest
Solutions
Expert Solution
1.
=-38400000+62400000/1.1-11400000/1.1^2
=8905785.124
2.
Accept
3.
-38400000+62400000/(1+x)-11400000/(1+x)^2=0
=>IRR=x=41.523%
-79.023% and 41.523% from smallest to largest
jeff jeffy answered 2 years agoRelated Solutions
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