1 A project requires US$ 260 Million of total Investment, which excludes exploration Sunk Cost of in year 1. First oil is expected to be in year 4. Below is the forecasted annual Net cash flow for your assessment. a) Calculate the economic indicators for the Look Forward Economic Analysis starting from year 3. b) If the company WACC is 10%, is the project good enough to proceed? b) If the company WACC is 20%, is the project good enough to proceed? Year 1 Year 2 Year 3 Year 4 Year 5 Net Cash Flow -32 -260 90 80 Cum. Net Cash Flow Year 8 Total Year 6 80 Year 7 70 58 n Discount Factor @ 10% Discounted Net Cash Flow @10% Discount Factor @ 15% Discounted Net Cash Flow @15% Discount Factor @ 20% Discounted Net Cash Flow @20% NPV NPV NPV Max. Cash Sink PIR IRR @0% @10% @20%