1. Petro Canada is considering building a pipeline from Calgary to Vancouver at the cost of $18 Billion over five years. Cost will be distributed as follows: $3 billion each in Year 1, 2, and 3. Year 4 will cost $4 billion and year 5 will cost $5 billion. In the sixth year, operation and revenue flow would begin. Petro Canada is anticipating 20 years of revenue stream as follows: $2 billion per year in revenue in the first five years of operation. Afterwards, for the next 10 years revenue is anticipated at $3 billion per year. The last five years revenue is expected at $2 billion per year. The cost of capital is 12%. Assume investment is spent at the beginning of the year and revenue is received at the end of the year.

What is the payback period for this project? Find NPV and Profit Index. Should Petro Canada take this project? What if cost of capital increases to 15%, how would your results differ? Answer question in excel.