Mr Blight the owner of Blight Oil exploration firm is evaluating a new Oil well in Calgary Alberta. The oil exploration engineer has just finished his analysis of the new Oil well. He has estimated that the Oil well will be productive for eight years, after which the well become dry. The Oil well will cost $450 million for exploration. The expected cashflow each year from the Oil well are shown below and Blight Oil exploration firm has a 12% required return on all its Oil well. Year Cash flow 0 -$450,000,000 1 63,000,000 2 85,000,000 3 120,000,000 4 145,000,000 5 175,000,000 6 120,000,000 7 95,000,000 8 75,000,000 9 -70,000,000

Required a) Determine the payback period, internal rate of return and net present value. Based on your analysis should the company open the new Oil well?