1. How does the timing of cash flow affect your Net Present Value (NPV) and Internal Rate of Return (IRR) calculations? Is it better to receive returns early or later?
2. In what conditions, can you expect the Net Present value (NPV) and the Profitability Index (PI) measures to diverge?
3. Ghanata Oil has a well that will produce an annual cash flow of $236 million next year. The cash flow is expected to increase by 3.5 percent per year indefinitely. What is the well worth today if the discount rate is 15 percent?
A. $1,573 million
B. $899 million
C. $2,052 million
D. $1,725 million