Fundamentals of Oil & Gas Accounting 5th Edition by Rebecca Gallun, Charlotte Wright

Exercise 2

Polecat Corporation is considering beginning drilling operations in three separate fields.
Polecat decides to analyze these fields using a 13% discount rate. The estimated cash
flows for each field are as follows: REqUIRED:
a. Calculate the net present value of each field
b. Calculate the profitability index of each field.
c. Determine the internal rate of return of each field.
d. Rank the fields from best investment to worst investment.