Question 3: Your firm's geologists have discovered a small oil field in New York's Westchester County. The field is forecasted to produce a cash flow of C1 $2 million in the first year. You estimate that you could earn an expected return of r 12% from investing in stocks with a similar degree of risk to your oil field. Therefore, 12% is the opportunity cost of capital. What is the present value? The answer, of course, depends on what happens to the cash flows after the first year. Calculate present value for the following cases: a. The cash flows are forecasted to continue for 20 years only, with no expected growth or decline during that period (5 Marks) b. The cash flows are forecasted to continue for 20 years only, increasing by 3% per year because of inflation (5 Marks) c. Evaluate the cashflows in a and b and explain which one you will choose and why (10 Marks) Contextual Information: The students can base their replies on wider research, even from the internet sources, however, all information should be appropriately referred using Business School's referencing style. Though students quantitative analysis will be same, however, justification, use of theory, paper structure and background for recommendation is to be explained in detail for which you will get higher awards Requirement Submission is required in MS Word format in Part 1 of the Assignment and MS Excel is required to be uploaded in Part 2 of the Assignment. In MS Word document, Students must have a cover page, with name and word limit written on the same. Formalities: . Wordcount: No specific word limits will be applied to some of the questions in this TMA. Cover, Table of Contents, References and Appendix are excluded of the total wordcount. Font: Arial 12,5 pts. Text alignment: Justified The in-text References and the Bibliography have to be in Harvard's citation style