(Payback period and NPV calculations) Pato Energy is an oil and gas exploration and development company located in Farmington, New Mexico. The company drits shatlow wehs in hopes of Inding signilicant oil and gas deposits. The firm is considering fwo ditlerent dililing opportunities that have very ditlorent production potentials. The first ts h the Bamett Shale reglon of central Texas and the other is in the Gulf Coast. The Bamet Shale profect reguires a much larger initial investment but provides cash flows (If successtul) owor a much longer period of time than the GuM Coast oppertunity. In addition, the longer life of the Barnes Shale project also results in additional expendtures in year 3 of the project to enhance production throughout the projects 10 -year expected life. This expondiure involves pumping ether water or CO2 down into the wells in arder to increase the flow of oil and gats from the structure. The expected cant flows for the two projects are as follows a. What is the paryback period for each of the two probocts? b. Eased on the payback periods, which of the wo projects appears to be the best allernative? What are the limitations of the payback period ranking? That is, shat does the payback period not conshder that is impertant in determining the value caeation potental of these two projects? c. If Plates management uses a discount mate of 196 percent to evakate the present values of its energy investinent projects, what is the NPV of the two proposed invesements? d. What is your estimate of the value that will be created for Plato by the acceptance of each of these two invertenents? a. Given the cash flow intormation in the table, the payback period of the Barnett Shale peoject is years. (Round to bwo decanal places.) tt also results in ado CO2 down into the of the payback peri rojects, what is the two decimal places.)