Please include the formulas used in caluclations, thank you

4. A petroleum project involves production of crude oil from a 5,000,000 barrel reserve. Time zero mineral rights acquisition costs (lease bonus) of $2,000,000 is the basis for cost depletion. Intangible drilling expenses of $3,500,000 will be incurred in time zero. Tangible producing equipment costing $3,000,000 at time zero will go into service in year 1 and be depreciated using the 7-year MACRS depreciation. Production is estimated to be 350,000 barrels per year, starting in year one. Wellhead crude oil value before transportation costs is estimated to be $80 per barrels in year one, $82 in year two, and $84 in year three. Royalties are 12.5% of gross revenues (well-head value) each year, operating costs are expected to be $30 per BOE of production in year one, $32 in year two, and $34 in year three. The allowable depletion rate is 15.0% when applicable. The effective federal and state income tax is 40.0%. No other income exists against which to use deductions, so all negative taxable income will be carried forward until used against project income (stand alone analysis). Determine the cash flows for years 0, 1, 2, and 3 without taking write-offs on remaining tax book values at year 3, assuming: a) The investor is an integrated producer. Expense 70% of intangible drilling costs in time zero. Capitalize and deduct the other 30% by straight line amortization over 60 months. Only cost depletion may be taken by integrated producers b) The investor is an independent producer with less than 1,000 barrels per day average production. Expense 100% of intangible drilling costs in time zero. The larger of percentage depletion (subject to the 100% limit) and cost depletion is allowed on production up to 1,000 barrels per day c) The investor is an independent producer with more than 1,000 barrels per day. Expense 100% of intangible drilling costs in time zero; only cost depletion is allowed on incremental production above 1,000 barrels per day (i.e., only use cost depletion for this case) 4. A petroleum project involves production of crude oil from a 5,000,000 barrel reserve. Time zero mineral rights acquisition costs (lease bonus) of $2,000,000 is the basis for cost depletion. Intangible drilling expenses of $3,500,000 will be incurred in time zero. Tangible producing equipment costing $3,000,000 at time zero will go into service in year 1 and be depreciated using the 7-year MACRS depreciation. Production is estimated to be 350,000 barrels per year, starting in year one. Wellhead crude oil value before transportation costs is estimated to be $80 per barrels in year one, $82 in year two, and $84 in year three. Royalties are 12.5% of gross revenues (well-head value) each year, operating costs are expected to be $30 per BOE of production in year one, $32 in year two, and $34 in year three. The allowable depletion rate is 15.0% when applicable. The effective federal and state income tax is 40.0%. No other income exists against which to use deductions, so all negative taxable income will be carried forward until used against project income (stand alone analysis). Determine the cash flows for years 0, 1, 2, and 3 without taking write-offs on remaining tax book values at year 3, assuming: a) The investor is an integrated producer. Expense 70% of intangible drilling costs in time zero. Capitalize and deduct the other 30% by straight line amortization over 60 months. Only cost depletion may be taken by integrated producers b) The investor is an independent producer with less than 1,000 barrels per day average production. Expense 100% of intangible drilling costs in time zero. The larger of percentage depletion (subject to the 100% limit) and cost depletion is allowed on production up to 1,000 barrels per day c) The investor is an independent producer with more than 1,000 barrels per day. Expense 100% of intangible drilling costs in time zero; only cost depletion is allowed on incremental production above 1,000 barrels per day (i.e., only use cost depletion for this case)