Question
1. For the development of a newly discovered off-shore oil field, inputs from reservoir and facilities engineers produced the following estimated net-cash-flow after taxes. It
1. For the development of a newly discovered off-shore oil field, inputs from reservoir and facilities engineers produced the following estimated net-cash-flow after taxes. It is known that there are other opportunities exist with an interest rate of 20% and the company's hurdle DPI is 1.2. Year Net Cash Flow After Tax, million USD 0 -150 1 -50 2345 -44 125 150 145 5 Perform an economic analysis by calculating the following economic indicators and recom - mend a decision of accepting or rejecting this offshore development project. (a) Net present value (NPV) (b) Rate of return(ROR) (c) Discounted profitability index (DPI) (d)Value creation (e) Discounted payback period
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