Please find the questions and relevant chart below. Please answer in details, thank you very much!!

Problem:

Suppose in 2014 a country named Rutenia decided on undertaking the biggest investment project in its history.

The project called SuperStream is in every respect similar to the Power of Siberia in terms of its nature, size etc (more details on Slide 12). There is even a declined alternate project called Antaeus [aen'ti?s] similar to Altai.

The new Rutenian government having come to power in 2020 and analyzed SuperStream was shocked and asks you to advise what ought to be done with the project considering:

1. Its actual cost for 2014-2019 as well as initial forecast cash flows look like in the table above.

2. The problem is that the initially forecast Free Cash Flows to Firm (FCFF) seem to be grossly overstated due to

• fall in gas priceswhich (according to the contract) follow oil prices (about $40/brl today vs expected $80+)
• rise indevelopment costswhich have proved to be $4bn higher than initially planned $55,8bn (this $4bn is due to be incurred in 2020)

Your task: Advise the new government on the best course of actions regarding the project considering the expected annual FCFF will likely be $3bn during all the 60 years of the project starting from 2025 (to 2084 when the project ends). Most important is to submit your financial calculations. Non-financial arguments although welcome, aren't as important as the calculations for our learning. Don't waste time on searching data beyond Alex Fak's report and the article of his critic you read for your previous home work.

Note: It's possible that you'll have to make some assumptions if you're ready to submit an advanced (not a simplified) version of your answer. Please state your assumptions clearly. I intentionally give you a task in general terms only because it's the most usual way to get it from your employer or sometimes from your potential employer. It's your task to chose the right way and understand what sort of data you need. The same thing might happen during job interviews in the best companies where non-standard questions are deliberately chosen to pick the best candidate (where also you are in addition under heavy stress). You don't have to apply complex theories beyond what you know. Often applying common sense will do.

The theory needed for your reply is laid down below

1. Only cash flowsare included into your investment appraisal calculation.Accrued expenses not accompanied by cashflows are ignored.
2. Onlyrelevantcash flows are accounted for. That's to say only those that aregenerated due to the project. Ignore cash flows that take place regardless of acceptance or decline of the investment project. Alsoignore debt/capital cash flows(borrowings/capital issues etc) when you useFCFF (Free Cash Flows to Firm).
3. Time value of money must always be accounted forin investment projects either by discounting or by adding up to your investment expense if it's financed by debt duringzeroyear (whose cash flowis never discounted)

Regarding item 3. above. We left our zero year investments in our volunteers' spreadsheets "as is" (without adding interest in ZERO year). I hoped someone would guess it on the one hand and didn't want to overwhelm you too early on the other hand. During solvingproblem 5 or even 4 I told you I however that I didn't agree with treating investment outlay in the zero year and added we for now would leave it as it was.

Chart:

2014-2019 2020 2021 2023 2014 2025 Years FCFF Free Cash Flow to Firm -25,8 49 -3,5 -1.6 -13 46 Discount factors @ 10%% 75% 6896 51% 10% Discounted Cash Flows 25.8 -5.545 -2.63 -1.043 -0.807 2.597 2412 2.1 Net Present Value (NPV) 2028 2029 2030 2031 2032 2003 20135 2036 2037 12 13 15 4.6 4 5 4.4 43 43 4.3 43 43 43 43 4.3 43 47% 39% 359% 3236 29%% 26% 24% 22%% 20% 15% 143 2.146 1.908 1.696 1.37 1 246 1.132 1,029 0.935 0.851 0.773 0.TO3 0.581 2041 2042 2045 2047 2048 2049 2054 2051 20152 2053 2054 24 25 26 27 29 31 34 35 43 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 12% 11% 10%% 0.528 0.437 D.397 0.361 0.328 1 298 0.271 0.246 0.124 0.204 0.168 0.153 2055 2056 2089 2060 206 2065 2046 36 37 39 44 45 48 49 43 4.3 4.3 4.3 43 4.3 4.3 4.3 43 4.3 4.3 4.3 3% 3%% 3% 2% 2% 19% 1% 1% 19% 0.139 0.126 0.115 0.105 0.095 0.086 0.079 0.071 0.065 0.059 0.054 0.049 0.044 0.04 2071 1072 2073 2074 2075 2078 2081 54 60 43 4.3 4.3 43 4.3 4.3 4.3 4.3 41 4.3 4.3 41 1% 1% 0% 0.037 0.033 0.03 0.028 0.025 0.021 0.019 0.017 0.014 0.013 0.012 0.0LI 1071 2073 2074 1075 2076 2078 2079 2080 2083 108 32 53 55 58 50 4.3 41 43 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 43 4.3 1% 1% 1% 0% 0.028 0.025 0.023 0.019 0.017 1016 0.014 0.013 0.012 0-011 0.01