The Seaside Oil and Gas Company is considering drilling three separate fields. Seaside decides to analyze these fields using a \( 10 \% \) discount rate. The cash flows are shown in the following table:
\begin{tabular}{llll}
years & \( \$ \) & \( \$ \) & \( \$ \) \\
\( \mathbf{0} \) & \( (\$ 85000) \) & \( (\$ 185000) \) & \( (\$ 485000) \) \\
\( \mathbf{1} \) & 40000 & 35000 & 160000 \\
\( \mathbf{2} \) & 30000 & 35000 & 160000 \\
\( \mathbf{3} \) & 30000 & 35000 & 160000 \\
\( \mathbf{4} \) & 25000 & 35000 & 85000 \\
\( \mathbf{5} \) & 20000 & 35000 & 85000 \\
\( \mathbf{6} \) & 10000 & 35000 & 60000 \\
\( \mathbf{7} \) & 0 & 35000 & 30000 \\
\( \mathbf{8} \) & 0 & 35000 & 30000 \\
\( \mathbf{9} \) & 0 & 35000 & 30000 \\
\( \mathbf{1 0} \) & 0 & 35000 & 30000
\end{tabular}
Based on the data provided, please calculate the following indicators for this project:
a. Calculate the Net Present Value (NPV) of each field
b. Calculate the Profit Index (PI) of each field
c. Determine the Internal Rate of Return (IRR) of each field
d. Based on the results of your calculations, propose to the management of Seaside Oil and Gas
Company which project should the company accept and why. Provide a brief explanation to support your proposal.
