Questions A-D.

You can go back to my video, which explains all of the following, for additional help with this The Drillago Company is involved in searching for locations in which to drill for oil. The firm's current project requires an initial investment of $15 million and has an estimated life of 10 years. The expected cash flows for the project are as shown in the adjacent table. Drillago Year Answer the following questions: 1 a. Calculate the project's payback period. Is the project acceptable under PBP? Cash Flow - 15,000,000 600,000 1,000,000 1,000,000 2,000,000 3,000,000 3,500,000 4,000,000 8 6,000,000 9 8,000,000 10 12,000,000 Cumulative Cash Flow -15,000,000 -14,400,000 -13,400,000 -12,400,000 -10,400,000 -7,400,000 -3,900,000 100,000 6,100,000 14,100,000 26,100,000 71 b. Calculate the project's NPV. Is the project acceptable under NPV criterion? Explain. Cost of Capital 13.0% c. Calculate the project's profitability index. Explain the relationship between PI and NPV. Payback Period NPV Profitability Index IRR 6.98 years 1,698,543 1.11 14.76% d. Calculate the project's IRR. Is the project acceptable under IRR technique