1-6 A. The reservoir pressure in the Bogus Field has declined to the point that Well' 1-1 will no longer flow naturally. As a result, it has been decided that a downhole electric pump having a ser- vice life of six years will be purchas ed for $12,000. The pump will cause the wel to produce the oil production as shown in the following table Production (Bbls) 1,000 950 900 850 800 750 Year - 4 6 4 Basic Concepts Operating costs are estimated to be $7,500 the first year and will increase by $500 each of the following five years. The pump has.no.salvage.valuc Calculate gross revenue using a cons- tant oil price of $20/Bbl. Calculate the financial net income BFIT for each year using straight line depreciation. Assume a six year life a. b. Calculate the financial net income BFIT for each year using UOP depreciation Prepare a net cash flow analysis BFIT for this investment. Draw the cash flow diagram. c. If the tax rate is 46% for this project Prepare a net cash flow analysis AFIT for this investment. For in- come tax purposes, use straight line depreciation assuming a five year life. Prepare a net cash flow diagram a. b. Calculate the financial net income AFIT for each year using straight line depreciation. Assume a six year life for financial depreciation purposes. Use the cash taxes from part a for the financial model. c. Calculate the financial net income AFIT for each year using UOP depreciation. Again use cash taxes from part a