Due to declining production rate, your company is proposing to install a water flooding system in order to enhance the production rate. The investment of the system will cost RM 50 Million and the useful life of the system is 5 years, with a straight line depreciation method with zero salvage value. The predicted gross revenue, CAPEX, and OPEX for every year from water flooding project life are given in Table 2 below: 5 Table 2: Gross revenue and costs in years of project life. Year 0 1 2 3 4 Gross Revenue, 55 60 60 50 USD Mil CAPEX, USD Mil 50 OPEX, USD Mil 5 5 5 40 5 5 10 20 Royalty (%) Cost Oil Ceiling (%) Profit Oil Sharing (%), Contractor Income Tax (%) MROR (%) 40 30 15 Determine: (a) The yearly net cash flow for the Contractor. (50 Marks) (b) Using Net Present Value (NPV) analysis at the Contractor's MROR, determine whether the water flooding project should be implemented. (10 Marks)