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How do you do this in Excel? Question 4 (40 points): Calculate the After-Tax Cash Flow, ROR, and NPV (at minimum ROR 10%, after tax)
How do you do this in Excel?
Question 4 (40 points): Calculate the After-Tax Cash Flow, ROR, and NPV (at minimum ROR 10%, after tax) for the following investment with 6-year project life time and a Corporate Tax Rate of 21%; The investor is an Integrated Petroleum Company . Total producible oil in the reserve is estimated to be 3,000,000 barrels Production rate will be 500,000 barrel of oil per year from year 1 to year 6 . Mineral rights acquisition cost for property would be $5,000,000 at time zero . Intangible drilling cost (IDC) is expected to be $15,000,000 at time zero . Tangible equipment cost is $5,000,000 at time zero . Working capital of $1,000,000 also at time zero . Equipment depreciation will be based on MACRS 5-years life depreciation starting from year 1 to year 6 (consider rates from table A-1 for 5-years with half-year convention) The oil price is $50 per barrel which has 1% escalation each year starting from year 0 Operating cost is $2,500,000 annually with an escalation rate of 5% starting from year 0 Environmental OPEX (Year 6), $2,000,000 escalated 5% starting from year 0 Royalty 12.5% . . For depletion cost calculations, amortize the Mineral rights acquisition cost equally over 6 yearsStep by Step Solution
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