3. Kong Petroleum, Inc., is trying to evaluate a generation project with the following cash flows:...

   

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3. Kong Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year 0 1 Cash Flow - $28,000,000 53,000,000 2 - 18,000,000 The following graph illustrates the project's NPV profile: NPV 10- 5 -1.0 -0.8 -0.5 -0.4 -0.2 0.2 0.4 6 0.8 1.0 Interest Rate -5 -10 Net Present Value Profile (a) If the company requires a 10 percent return on its investments, should it accept this project? Why? (b) How many IRRs are there? If you apply the IRR decision rule, should you accept the project or not? What's going on here? 3. Kong Petroleum, Inc., is trying to evaluate a generation project with the following cash flows: Year 0 1 Cash Flow - $28,000,000 53,000,000 2 - 18,000,000 The following graph illustrates the project's NPV profile: NPV 10- 5 -1.0 -0.8 -0.5 -0.4 -0.2 0.2 0.4 6 0.8 1.0 Interest Rate -5 -10 Net Present Value Profile (a) If the company requires a 10 percent return on its investments, should it accept this project? Why? (b) How many IRRs are there? If you apply the IRR decision rule, should you accept the project or not? What's going on here?