5. Petroleum Drilling Inc. is considering the construction of a deep-sea oil rig at a cost of $500 million. The rig will produce 1.2 million barrels per year forever. The extraction cost is $50/barrel and the cost is expected to remain constant. The cost of capital is 10 percent and tax rate is zero. The price of oil is $100/barrel today but the oil price is uncertain in the coming years. It is equally likely to be $120/barrel or $80/barrel next year and the years after. The company is considering the option to postpone the project investment by one year because it can simply cancel the project if the NPV turns out to be negative in the next year. (a) What is the project's NPV at the end of next year if the oil price turns out to be $120/barrel? Would the company invest in te project at that time (year 1) given this NPV? (3.0 pts.) (b) What is the project's NPV at the end of next year if the oil price turns out to be $80/barrel? Would the company invest in the project at that time (year 1) given this NPV? (3.0 pts.) (c) Can you calculate today's NPV of the project if it were postponed by one year? (2.0 pts.)