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.

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

$$4,900,000$

$960,000$

$1,600,000$

$2,880,000$

$1,360,000$

$800,000$

$12\%$

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

$($lgnore income taxes$).$