(Payback period and NPV calculations)Plato Energy is an oil and gas exploration and development company located in Farmington, New Mexico. The company drills shallow wells in hopes of finding significant oil and gas deposits. The firm is considering two different drilling opportunities that have very different production potentials. The first is in the Barnett Shale region of central Texas and the other is in the Gulf Coast. The Barnett Shale project requires a much larger initial investment but provides cash flows (if successful) over a much longer period of time than the Gulf Coast opportunity. In addition, the longer life of the Barnett Shale project also results in additional expenditures in year 3 of the project to enhance production throughout the project's 10-year expected life. This expenditure involves pumping either water or CO2 down into the wells in order to increase the flow of oil and gas from the structure. The expected cash flows for the two projects are as follows:

Year	Barnett Shale	Gulf Coast
0	$(4,500,000)	$(1,300,000)
1	1,800,000	850,000
2	1,800,000	850,000
3	(900,000)	425,000
4	1,800,000	140,000
5	1,600,000
6	1,600,000
7	1,600,000
8	950,000
9	450,000
10	150,000