(Payback period and NPV calculations) Plato Energy is an oil and gas exploration and development company located in Farmington, New Medico The company is shallow wells in Bapes of finding significant deposits. The firm is considering two different ring opportunities that have very different production potential. The festine Brett Shale region of central Texas and the other is the Gulf Coast The Barnett Shale projed and gas requires a much larger in v estment provides cash flow c o ver a much longer period of time than the Gulf Coast opportunity In addition the longer be the lame Shale ed in additional expenditures in year of the project to enhance production throughout the projects 10 year expected to this expenditure involves pumping the water or CO, down to the well in order to increase the well and gas from the structure. The expected cash flows for the wor ds are as follows a. What is the payback period for each of the two projects? orable h. Based on the payback periods, which of the projects appears to be the best tomative? What are the mains of the payback period ranking? That is what does the payback period not consider that is important in determining the value creation potential of these two projects? C. Plato's management uses a discount rate of 20 2 percent to evaluate the present values of its energy rement projects what is the NPV of the two proposed investments? d. What is your estimate of the value that will be created for Plato by the acceptance of each of these two investments? . Given the cash flow information in the table, the payback period of the Burnett Shale project is yours (Round to two decimal places) Year Gulf Coast $(1,100,000) 900.000 900,000 450,000 150,000 OOoon AwN-O Barnett Shale $(5,400,000) 2.160.000 2,160,000 (1,080,000) 2,160,000 1.760,000 1.760,000 1.760.000 850,000 450.000 80.000