Polecat Corporation is considering beginning drilling operations in three separate fields.

Polecat decides to analyze these fields using a 13% discount rate. The estimated cash flows for each field are as follows:

REQUIRED:

a. Calculate the net present value of each field

b. Calculate the profitability index of each field.

c. Determine the internal rate of return of each field.

d. Rank the fields from best investment to worst investment.

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Years East Field Cash Flows South Field Cash Flows 0 $(105,000) $(425,000) West Field Cash Flows $(300,000) 1 40,000 100,000 50,000 2 35,000 100,000 50,000 3 30,000 100,000 50,000 4 20,000 100,000 50,000 5 15,000 90,000 50,000 10 63890 10,000 90,000 40,000 7 5,000 90,000 40,000 0 40,000 40,000 0 40,000 40,000 0 20,000 40,000