Spreadsheet Exercise

Spreadsheet icon 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 future cash inflows for the project appear in the following table.

Year Cash inflows
1 $     600,000
2     1,000,000
3     1,000,000
4     2,000,000
5     3,000,000
6     3,500,000
7     4,000,000
8     6,000,000
9     8,000,000
10 12,000,000

The firm’s current cost of capital is 13%.

To Do

Create a spreadsheet to answer the following questions.

  1. Calculate the project’s net present value ...

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