Question 1: You are just been hired as a chief petroleum economist in the Statoil Company who owns and operates Merata field located in ultra-deep-water, close to the coast of Angola. Now the managers of the Statoil Company, which has the right to develop the project, ask you to estimate the financial viability of the project to facilitate their decision on whether to invest in the project at all. All the necessary information to help you appraise the project is presented in the Tablel. 90.214 30.542 5 Table 1: Financial Analysis data of Purchased FPSO Development Concept Year 2020 2021 2012 2023 2004 Daily Production, thousand barrer day 0 30.547 50 372 Number of artidas 365 365 365 365 365 Annual Production, barrels 11 149.65 26.081.80 5 0 5 Average Oil Price Share 65 65 65 65 65 Total Revenues, SMM Operating Expenditures, 74 SMM 132 304 Transportation Expenditures, SMM Capital spenditures SMM 450 900 900 300 300 Depreciation Allowances, SMM 600.00 600.00 500.00 600.00 Taxable incomes, SMM 450 -8.20 1.109 Annual Corporate Income Tax (tax rate -21%) 0 O 233 145 Charges, SMM Annual Royalty Charges LLO SMM 72 120 170 Amul Local Other shares 2 SMM - 14 Total Paid Tasek SMM 0 Total Annual Net Cash Flow. SMM && 34 Use the information in Tablel to appraise the project based on the following A. Compute the total annual cash inflow, annual cash outflow and the Total Amnual Net Cash Flows of the project (3 marks) B. Calculate the Discounted NPV at 10% and based on that, what advise can you provide to management on whether not to develop the project? (6 marks) C. Given that the Statoil Company has set itself a Minimum Acceptable Rate of Return of 10%, should it invest in the project? Please provide your estimations and a short discussion of your results, using discounted rates of 10% and 19.5% in calculating the internal rate of return of the project. (6 points) D. Calculate the payback period of the project at 10% discount rate interest rate). What recommendation can you make to management based on the payback appraisal approach? (5 marks) E. If the oil price reduces to 26 dollars per barrel, would your decision based on question (A) changed? Provide all calculations to support your