5 A task force of capital budgeting analysts at Morrison Limited collected the following data concerning the drilling and production of known petroleum reserves at an offshore location: Table 6-4. Note: Use appropriate factor(s) from the table provided. 10 points eBook Investment in rigging equipment and related personnel costs required to pump the oil Net increase in inventory and receivables associated with the drilling and production of the reserves. Assume this investment will be recovered at the end of the project Net cash inflow from operations for the expected life of the reserves, by year: 2022 2023 2024 Salvage value of machinery and equipment at the end of the well's productive life Cost of capital Required: a. Calculate the net present value of the proposed investment in the drilling and production operation. Assume that the investment will be made at the beginning of 2022, and the net cash inflows from operations will be received in a lump sum at the end of each year (Ignore income taxes). b. What will the internal rate of return on this investment be relative to the cost of capital? c. Differences between estimates made by the task force and actual results would have an effect on the actual rate of return on the project. For each estimate, state the effect on the actual ROI if the estimate turns out to be less than the actual amount finally achieved. Complete this question by entering your answers in the tabs below. $4,900,000 960,000 1,600,000 2,880,000 1,360,000 800,000 12% Required A Required B Required C Calculate the net present value of the proposed investment in the drilling and production operation. Assume that the

A task force of capital budgeting analysts at Morrison Limited coliected the following data concerning the drilling and production of inowt petroleum reserves at an ollshore location: Table 6-4. Required: a. Calculate the net present value of the proposed imvestment in the drilling and production operation. Assume that the investment wil be mode of the beginhing of 2022, and the net cash inflows from operations will be recelved in a lump sum at the end of each year (jgnore income taxes) b. What will the internal rate of return on this investment be relative to the cost of capital? c. Oifferences between estimates made by the task force and actual results would have an effect on the actual rate of return on the project. For each estimate, state the effect on the actual Rol if the estimate turns out to be less than the actual amount finally achieved. Complete this question by entering your answers in the tabs below. Required: a. Calculate the net present value of the proposed investment in the drilling and production operation Assume that the imvestment will be made at the beginning of 2022 , and the net cash inflows from operations will be recelved in a lump sum at the end of each year Ugnore income taxes). b. What will the internal rate of return on this imvestment be relative to the cost of capital? c. Oifferences between estimates made by the task force and actual results would have an effect on the actual rate of return on the project. For ench estimate, state the effoct on the actual ROI if the estimate turns out to be less than the actual amount finally ochieved. Complete this question by entering your answers in the tabs below. Calculate the net present value of the proposed investument in the drilling and production operabion. Assume that the investment will be made at the beginhing of 2022 , and the net cash inflows from operations will be received in a lump sum at the end of each year (tanore income taxes). Required: a. Calculate the net present value of the proposed investment in the drilling and production operation. Assume that the investment be made at the beginning of 2022, and the net cash inflows from operations will be received in a lump sum at the end of each ye (lgnore income taxes). b. What will the internal rate of return on this investment be relative to the cost of capital? c. Differences between estimates made by the task force and actual results would have an effect on the actual rate of return on the project. For each estimate, state the effect on the actual ROI if the estimate turns out to be less than the actual amount finally achieved. Complete this question by entering your answers in the tabs below. What will the internal rate of return on this investment be relative to the cost of capital? Aequired: a. Calcutate the not present value of the proposed investment in the drilling and production operation, Assume that the investment will be made at the beginning of 2022 , and the net cash inflows from operations will be recolved in a lump sum at the end of each year (Ignore income taxes). b. What will the internal tate of return on this investment be relative to the cost of capitar? c. Differences between estimotes made by the task force and actual results would have an effect on the actual rate of return on the project. For each estimate, state the effect on tho octual ROI if the estimate turns out to be less than the actual amount finally schieved. Complete this question by entering your answers in the tabs below. Differences between estimates made by the task force and actual results would have an effect on the actual rate of return on the project. For each estimate, stase the effect on the actual Rol if the estimate turns out to be less than the actual amount finaliv acthieved