Suppose you are considering a project that will have an initial construction cost today and a final cleanup cost at the end of the project's lifetime. The initial cost is $64,000 today, followed by expected annual inflows of $12,000 for the next 9 years, followed by a final outflow of $39,000 one year after the last inflow. If your cost of capital is 5.8%, what is this project's profitability index? a. 1.17 b. 0.75 O c. 0.55 o d. 1.60 O e. 1.10 O f. 0.63 O g. 1.32 O h. 0.96

Problem 9-25 Fudge factors An oil company executive is considering investing $10.1 million in one or both of two wells: well 1 is expected to produce oil worth $3.01 million a year for 10 years; well 2 is expected to produce $2.01 million for 15 years. These are real (inflation-adjusted) cash flows. The beta for producing wells is 0.91. The market risk premium is 9%, the nominal risk-free interest rate is 7%, and expected inflation is 3%. The two wells are intended to develop a previously discovered oil field. Unfortunately there is still a 21% chance of a dry hole in each case. A dry hole means zero cash flows and a complete loss of the $10.1 million investment. Ignore taxes and make further assumptions as necessary. a. What is the correct real discount rate for cash flows from developed wells? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Real discount rate b. The oil company executive proposes to add 20 percentage points to the…

Please answer G part with explanation

Answer Question 4

Trying to find answer a through e

Can you answer part E of this qu

Wrong Answer

But why? for number 3

A, B, C

need help with question 6